Company Law
What is the most common form of business in Turkey?
There are various forms of businesses in Turkey, including corporate and non-corporate forms such as General Partnership, Limited Partnership, and Partnership Limited by Shares. The most commonly used forms are the corporate forms of joint stock companies and limited liability companies. The limited liability company is often best suited for small and medium-sized businesses, with a minimum share capital of 10,000 TRY. On the other hand, the joint stock company is typically used for larger businesses, with a minimum capital requirement of 50,000 TRY. It’s important to note that while the financial thresholds and organizational structures of a limited liability company and a joint stock company may differ, the process for establishing both types of companies is generally the same.
What is a Limited Liability Company?
A limited company, also known as a limited liability company, is a type of business entity in which the shareholders’ liability is limited to the amount of capital they have invested. A single shareholder can establish a limited company, and the number of shareholders cannot exceed fifty. Shareholders can be both individuals and legal entities. They are not liable for the company’s debts, but are required to pay for the shares they have committed to. The limited company has two main organs: the General Assembly and the Director/Board of Directors. The General Assembly is responsible for making important decisions about the company, such as changes to the company contract, selecting directors, selecting auditors, and terminating the company. All shareholders are represented in this organ. The Director/Board of Directors is responsible for managing and representing the company. The company may have only one director, but at least one of them must be a shareholder. There is no requirement for directors to be Turkish citizens or to reside in Turkey.
How to establish a limited liability company in Turkey?
One of the most preferred business forms in Turkish law is the limited liability company (LLC). LLC partners are only liable for the amount of capital they initially invested in the company. Due to this and many other benefits, LLCs continue to be popular among entrepreneurs in Turkey.
For the establishment of a limited liability company in Turkey, the following steps need to be followed:
Step 1
Submission of the memorandum and articles of association to MERSIS Central Registry Record System
In preparation of the Article of Association on MERSIS, foreigners are required to submit a passport verification document along with their tax number. If the foreigner has an address in Turkey, a copy of the residence permit is also required. The elements that must be included in the limited liability company articles are the trade name, field of activity, headquarters, directors and managers, and shareholders and capital.
Trade Name: The title of the company must be checked for suitability and uniqueness before being registered. We will assist with this process.
Field of Activity: Limited liability companies can operate in any economic field that is not prohibited by law.
Establishment Address: A legal business address in Turkey is required to establish a limited liability company. If a physical office is not necessary, a virtual office can be rented and used as the company address. We can help find a suitable virtual office for your field of activity.
Directors and Managers: A limited liability company must have at least one director with signing authority. The sole partner of the company can also serve as director, or a third party can be appointed.
Note: If the representative of the company is not a Turkish citizen and wants to obtain a work permit, the company must have a minimum capital of 100,000 TRY to be eligible.
Step 2
Signing the Articles of Association by the company’s founders.
The founders then sign the contract, which is verified by a competent authority to confirm that the signatures belong to them. To complete this process, the founders or their authorized representatives must visit the trade registry office located at the headquarters of the company.
Step 3
Preparation of signature declarations of company representatives.
The signatures of the individuals authorized to represent the company must be approved by the trade registry directorate.
Step 4
Payment of Capital and Competition authority share.
Unless agreed otherwise by the parties, capital payments must be made to the company’s bank account, including the names of the partners, within 24 months of the establishment of the company.
Step 5
Application to the Trade Registry Directorate for registration.
After the necessary documents are sent through MERSIS and approved without any deficiencies, you must apply to the Trade Registry Directorate with the required organizational and application documents on the appointment day obtained online from the Trade Registry Directorate. The founders can register in person at the Trade Registry Directorate or through their lawyers authorized by power of attorney. In Turkish law, a commercial company gains legal personality upon registration in the Trade Registry.
The following documents are required for registering a company at the relevant Trade Registry Directorate in Turkey:
- Printout of the MERSIS application and company formation application form
- Photocopies of the partners’ ID cards and residency certificates
- Power of attorney (if the founding partners are not registering in person)
- Articles of association with the signatures of the founders, certified and the founding partners’ information form
- Written statements from non-shareholder board members accepting their duties
- Notarized signature statements from the company directors
- Proof of payment for the Competition Authority’s share.
Note: All documents issued and executed outside of Turkey (excluding the first item) must be notarized and apostilled or ratified by the Turkish Consulate in the country of transaction. The original, executed, notarized, and apostilled documents must be officially translated and notarized by a Turkish notary.
Step 6
Certification of Commercial books.
After registering a limited liability company in the Trade Registry, the company must have its commercial books certified by the Trade Registry Directorate in Turkey. Upon completion of the transaction, the inventory book, board of directors’ resolution book, and shareholders’ share book are delivered to the relevant party. Additionally, the Trade Registry Directorate publishes an announcement in the Commercial Registry Gazette within approximately 10 days after the company registration.
Step 7
Registration at Tax office and Chambers of Commerce and Industry.
Once the company registration in the Trade Registry is complete, procedures at the Tax Office must be initiated. After the following documents are submitted to the Tax Office, they will issue the company’s tax registration and business start notification:
- Original of the company registration letter and registration certificate
- Original or certified copies of the founders’ IDs
- Signature circulars
- Rental agreement of the workplace or real estate deed and partners’ addresses.
Additionally, a newly established limited liability company must be registered with the Chamber of Commerce or Industry where it is located. This registration can be done through MERSIS.
Step 8
Obtaining an electronic notification.
Newly registered corporate taxpayers must submit an electronic notification request to the affiliated tax office within 15 days of establishment.
Work Permit and the Establishment of a Limited Liability Company
A foreign investor must obtain a work permit to operate in Turkey through either a company established in Turkey or by taking over shares in a company. The main criteria for obtaining a work permit, according to the Regulation for Implementation of the Law on Work Permits for Foreigners, are as follows:
- Turkish citizens must have been employed in the company for which the work permit is applied.
- The company must have a capital of at least 100,000 TL. Companies with less than 100,000 TL capital must have at least 800,000 TL in gross sales and 250,000 TL in exports in the last year.
- The work permit applicant must be a shareholder of at least 20% of the company capital with a share worth at least 40,000 TL.
It’s important to ensure that the articles of association are prepared in accordance with Turkish Company Law and the correct documents are submitted to the relevant authority when establishing a company in Turkey. To avoid problems and delays, it’s advisable to seek professional legal support from a Company Lawyer in Turkey. As a Turkish Legal Office, we provide legal services for foreign clients to establish companies in compliance with Turkish Company Law.
We offer the following services for company establishment in Turkey:
- Obtaining tax ID
- Setting up corporate bank account
- Drafting the company’s Articles of Association
- Gathering required documents for trade registry registration
- Completing all necessary steps for registering the company with the trade registry
- Upon request, finding a suitable legal business address based on your field of operation.
Contact us today for a free consultation.