Introduction: Is company establishment in Turkey a solution?

It is necessary to make a reference to several advantages of setting up a business in Turkey:

• increasing young population,
• high value of currency rates,
• decreasing production and labor costs.

With regard to the advantages of doing business in Turkey also take a look at our articles :

• Investment Incentive Regime in Turkey 
• Is Turkey Safe for Investment?: Six Advantages to Grow Your Business in Turkey 
• Investment Opportunities in Turkey

What is the meaning of company establishment in Turkey

Company establishment in Turkey can be a strategic move for many businesses due to its dynamic economy and strategic location. This guide will walk you through the key steps and considerations for successful company establishment in Turkey.

What are the main legal instruments applicable to the company establishment in Turkey?

Turkish Commercial Code (Numbered 6102) is the most central legislation enforceable to founding a company in Turkey. In the light of the company type, Turkish Code of Obligations (Numbered 6098) and Turkish Civil Code (Numbered 4721) are also applicable to the Turkish company law under Article 126 of Turkish Commercial Code.

Do companies have a legal personality after company establishment in Turkey? 

Under Article 125 of Turkish Commercial Code, commercial companies have legal personality. To clarify, A company shall acquire a legal personality upon registration with the Trade Registry according to the Turkish Commercial Code. Therefore a company is accepted to be a separate legal person. That necessarily follows that all commercial companies may benefit from all rights and undertake debts within the framework of Article 48 of the Turkish Civil Code. Besides, those who conduct transactions and enter into commitments on behalf of the company before registration may be personally and successively held responsible for these transactions and commitments.

Can foreigners open a company in Turkey?

Can Foreigners Open a Company in Turkey? “Company establishment in Turkey is possible for foreigners. To register a company in Turkey for foreigners, the law numbered 4875 came into effect in 2013, granting foreign investors the same rights as Turkish citizens.

Owing to enactment of Foreign Direct Investment Law (Numbered 4875), the difference between foreign or national investors were eradicated under Turkish legal system in 2013. Presently, it is important to underline that foreign investors shall be subject to equal treatment with domestic investors. Besides, the principles and standards enumerated in Turkish Commercial Code facilitate foreign-led companies in Turkey.

What is more, there are many improvements dedicated to setting up a better investment hub in Turkey. Indeed, the 2024 FATF Decision on Türkiye accelerates all investment projects into Turkey. Potential results of the decision in question should be taken into evaluated carefully by all legal practitioners including business lawyers.

As a part of FATF obligations of Turkey, the Law Numbered 7518 on Amendments to the Capital Markets Law Numbered 6362 has been enacted in 2024. The Law Numbered 7518, mainly known as Turkish Crypto Law of enters into force following the circuit of the Official Gazette dated July 2, 2024.  The first decision on the 2024 Announcement for the Rejected Crypto Asset Platforms was delivered by the Board dated 23 August 2024. 2024 Legal Status of NFTs and P2P in Turkey was also clarified by the recent Resolution by Turkish Capital Markets on Turkish Crypto Assets Service Providers.

Besides the digital participation banking system is accepted by Turkish lawmakers in Turkey. Besides, the recognition of digital wallets has also been completed by means of new regulation of the Central Bank of the Republic of Türkiye. In this way, a Digital Wallet Era in Turkey started. Thirdly, the 2024 New Electronic Submission System for Turkish Capital Markets was instituted by the Capital Markets Board of Türkiye.

Forms of company establishment in Turkey

Which type of company to incorporate in Turkey?  You can establish five types of companies in Turkey. According to Article 42 and 43 of the Turkish Commercial Code collective company, commandite company, cooperative company, limited company, join stock company five main company types can be formed.

How can I register a company in Turkey?

How can I register a company in Turkey?  Above all, it is critical to take into account that the incorporation procedures can be carried out electronically through the Central Registry System (MERSİS). Markedly, the absence of any hassle in the formation process is of great significance in attracting foreign investments to Turkey.  What is very attractive is that the establishment of a single-shareholder joint stock company or single-member limited liability company is allowed under Turkish Commercial Law. Let us remind you that our office’s expert lawyers will be more than happy to assist you in the establishment of a company in Turkey.

How to establish a company in Turkey?

How to establish a company in Turkey? To summarize, investors should take a number of actions in the establishment of a company in Turkey. Duly preparation, performance and submission of paperwork concerned is critical for the below-mentioned requirements. Common requirements reads as follows for company establishment in Turkey:

• Preparation and signature of of the company contract by founders,
• Preparation and approval of the signature declarations of company officials,
• Payment of Competition Authority share and cash capital,
• Relevant documents submission and the completion of the registration of the company by the Trade Registry.

What are taxation liabilities for companies in Turkey? 

In general, companies are subject to a standard corporate income tax rate of 20% except for finance-centric companies including banks paying 25%. 2024 Changes to Turkish Tax Procedural Law must also be critically analyzed for all businessmen and individuals.

You can also read the following articles as they are related to the topic.

• Taxation of Remote Workers in Turkey
• Tax Guide in Turkey

Is share transfer possible instead of company establishment in Turkey for foreigners? 

It is of course possible to make an investment through the acquisition of shares rather than establishing a company directly. That is the case for both alien or local investors.

What are the steps in the liquidation process?

A company may terminate in case the realization of any of the reasons for termination stipulated at the law, and in line with the decision of the shareholders. There are two main types of liquidation: “compulsory” and “voluntary”. It requires a termination process of a legal entity. The Enforcement and Bankruptcy Code (Numbered 2004) is at the heart of this process. The main objective of the liquidation process is to sell the assets of the company and convert the assets of the involved company into money, collect their receivables, and pay debts. Article 536 of Turkish Commercial Code stipulates that the liquidation start-up, the appointment and announcement of Liquidor must be registered.

What is the procedure for company establishment in Turkey

The first step in the process of company establishment in Turkey is company registration. The registration process includes:

• Choosing a Company Name: Ensure the name is unique and not previously registered.
• Preparing Required Documents: This includes the articles of association, identification documents for shareholders, and other necessary paperwork.
• Registering with the Trade Registry Office: Submit all required documents to the local Trade Registry Office.
• Company Formation in Turkey
• Company formation in Turkey involves more than just registration. It includes setting up the operational aspects of the business. Key steps include:

What are core steps for company establishment in Turkey

Company formation in Turkey involves more than just registration. It includes setting up the operational aspects of the business. Key short-term steps include:

1. Opening a Bank Account: Essential for capital deposit and future transactions.
2. Obtaining a Tax Identification Number: Necessary for tax purposes and financial operations.
3. Registering for Social Security: Mandatory for hiring employees.
4. Obtaining Required Licenses and Permits: Depending on the business activity, additional licenses may be required.

Company incorporation in Turkey

Company incorporation in Turkey is the legal process that formalizes the establishment of your company. It involves:

1. Drafting and Notarizing the Articles of Association: Legal document that outlines the company’s structure and regulations. Particularly, a contract lawyer in Turkey and other law practitioners must understand the essential features of a contract and what a valid contract must contain. In Turkey, the role of a contract lawyer is pivotal as they help ensure that agreements are legally binding and enforceable, thereby protecting the interests of all parties involved.

Review our article on Contract Law in Turkey

1. Depositing the Minimum Capital Requirement: Depending on the type of company, a certain amount of capital must be deposited. This involves choosing the type of company you wish to establish, such as a Joint Stock Company (A.Ş.) or a Limited Liability Company Formation (LTD. ŞTİ.). Minimum Capital Amounts for Joint-Stock and Limited Liability Companies in Turkey has been newly updated for and beyond 2024 in Turkey.  This change will directly impact all investors for their ongoing and potential investment projects.
2. Submitting Incorporation Documents to the Trade Registry: Includes the notarized articles of association, proof of capital deposit, and other required documents.

Company establishment through a help of company lawyer in Turkey

Engaging a Turkish business lawyer specialized in company establishment in Turkey can significantly streamline the process. A lawyer can assist with:

1. Legal Documentation: Ensuring all documents comply with Turkish laws and regulations.
2. Navigating Bureaucracy: Handling interactions with various governmental bodies.
3. Advising on Business Structure: Providing insights on the best type of company for your business goals from legal professionals including Turkish business lawyers
4. Ongoing Legal Compliance: Assisting with compliance and regulatory requirements post-establishment.

Opening a company in Turkey

Opening a company in Turkey involves practical considerations beyond legal formalities. Important factors include:

1. Choosing a Physical Location: Securing an office or facility that meets your business needs.
2. Hiring Staff: Understanding labor laws and hiring practices in Turkey.
3. Setting Up Operations: Establishing operational processes and systems for day-to-day business activities.
4. Application for necessary permits and licenses: After the company establishment in Turkey, for specific fields there may be additional requirements. For instance in relation to health sector you should also obtain necessary licenses for the operational level. There are several critical updates in Turkey with regard to the health care sector. The 2024 Regulation on Medical Laboratories abolishes the previous one, dated 9.10.2023. That change is very critical to navigate dynamics for medical professionals and healthcare lawyers.
5. The proper management of company and corporate governance . After a company formation, the corporate governance covering the issue of who has power and responsibility about any effective decision on the company represents a second important stage. The 2024 Amendments to Turkish Commercial Code (Numbered 6102) contains significant changes in terms of working conditions of the board of directors within the context of companies. The present article will concentrate on a brief outline of the amendment concerned.
6. Application for significant advantages including Investment Incentive Regime in Turkey.

At this juncture, it is critical to underscore that foreign entrepreneurs should also keep in mind other opportunities to enter into Turkey. Formation of Liaison Offices in Turkey is another option for Turkey investment field.  Franchising in Turkey  is another type of method to enter into Turkey by foreign entrepreneurs. It is interesting and problematic that currently there is no specific Turkish legislation stipulating the scope of franchise agreements. What is more, the Block Exemption Communiqée on Franchise Agreements No:1998/7 was abolished with the entry into force the Block Exemption Communiqué on Vertical Agreements (No:2002/2). Hence, the franchise agreement is deemed as a “sui generis” type of contract.

Conclusion

Company establishment in Turkey offers numerous opportunities for businesses looking to expand into a vibrant and growing market. By understanding the key steps of company registration, formation, incorporation, and leveraging the expertise of a specialized lawyer, you can navigate the process smoothly and set up a successful business in Turkey. Whether you’re looking to start a small enterprise or a large corporation, Turkey provides a conducive environment for growth and success.