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Company Registration in Turkey

Company Registration in Turkey

Updated on Saturday 29th February 2020

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Foreign entrepreneurs interested in investing in Turkey should know that the basic features of the legal entities have recently changed with the ratification of the new Turkish Commercial Code, which came into force since 1st of July 2012. One of our Turkish lawyers can provide support and legal advice for foreigners interested in opening a company in Turkey. The new Commercial Code recognizes the following forms of Turkish legal entities:
 
 
  • limited liability companies (Limitet Şirket),
  • joint stock companies (Anonim Şirket),
  • comandite companies,
  • collective companies,
  • cooperative companies.

 

Our law firm in Turkey can offer more information on the new Commercial Law. Our lawyers in Turkey can help foreign investors interested in starting businesses here with tailored advice and services.
 

Partnerships in Turkey

 

The Commercial Code also provides for the creation of partnerships in Turkey (Kollektif Sirket and Komandit Sirket). Legal entities set up as Komandit Sirket are rarely used, as the general managers are liable for the debts incurred by the company. The ordinary partnerships are not considered legal entities; they are formed as a consortium of entrepreneurs who are personally liable for the debts of the consortium. An ordinary partnership cannot have a trade name and they are not registered at the Register of Commerce.  The ordinary partnership, which is known as a consortium, must not be registered with the Trade Register, as it is not considered a legal person in Turkey. Instead, it is created in front of a public notary where the members will sign a partnership agreement. Also, there are no distinctions between the participants to the partnership. The two forms of commercial partnerships are:

 

  1. general (Kollektif Sirket - all the members are fully liable for the debts and obligations and have equal rights); 
  2. limited (Komandit Sirket - formed by a general partner fully liable for the debts and obligations but with decisional powers and silent partners, liable for the debts and obligations in the limit of their contributions to the capital).

 

The joint stock company in Turkey

 

The A.S (joint stock company) requires having at least one shareholder and may be closed or open. The closed joint stock company must provide a minimum share capital of 50.000 TRY and the open joint stock company must provide a minimum share capital of 50.000 TRY and a registered capital of 100.000 TRY. There are two types of joint stock companies: the open and the closed public company. The first one has the right to trade its shares on the Stock Market, while the latter is not allowed to. With respect to the management of such companies, they must have a board of directors comprising at least one independent director.

 

The limited liability company in Turkey 

 

The limited liability company, shortly known as the LS, requires at least one member who must deposit a minimum share capital of 10,000 TRY (close to 3,300 euros). The total number of shareholders cannot be above 50. In terms of management, the LS must have at least one independent manager, however, a council of managers is also allowed. The new Company Law also provides for all Turkish limited liability companies to have their own websites. Our Turkish lawyers can provide more information with respect to this requirement.
 
Here is an infographic that explains, in short steps, the company registration in Turkey:
 
How to register a company in Turkey1.png

 

The comandite company in Turkey

 

The comandite company works like the limited partnership in other countries and must be registered by commanditers or limited partners whose liability will be limited to the amount they contributed with at the business and by unlimited partners. There is no necessity to subscribe a minimum share capital for this type of business and the liability for the company’s debt is not shared in the same way for all the shareholders; some shareholder may be liable for the subscribed capital, while other can be fully liable for the company’s debts, in accordance with the provisions of the Article of Association

 

The Turkish collective company

 

The collective company is a form of business formed with no minimum share capital, which is set up as a company with commercial activities. The liability of the members is limited by their contribution to the capital. All the shareholders of a collective company must be real persons. If you need more details about the types of companiesour law firm in Turkey can offer assistance on the subject. 

 

Foreign companies operating in Turkey

 

Foreign companies also have several options when it comes to establishing their operations in Turkey. These are the subsidiary, the branch and the liaison or representative office. The subsidiary company can take the form of a private limited liability company or of a joint stock company. The branch office is a separate business form which can be registered by foreign companies, while the representative office can only complete non-commercial activities in Turkey. In order to understand the characteristics of each business form, our Turkish lawyers have prepared a comparison between them.
 
The subsidiary is an independent company from the parent company which means it can take its own decisions, while the branch office must comply with the requirements imposed by the foreign company. The subsidiary company is not fully dependent on the parent company and can develop various types of activities compared to the branch office which must complete the same activities of the foreign company. Foreign financial companies will usually set up branch offices in Turkey, while commercial companies usually decide for subsidiaries as these can undertake other types of activities. No matter the operations to be completed, the parent company will apply for the necessary licenses on behalf of both the subsidiary and the branch office.
 
The establishment of a subsidiary or branch office in Turkey will be based on the written decision of the foreign company. The resolution must be filed with the Companies Register and will contain information about the parent company, among which the proof of its existence is the most important. The share capital requirements in the case of a subsidiary company are the same as in the case of the chosen type of entity. There are no such requisites for setting up a branch office, which is one of the major advantages of this business form. In the case of subsidiaries, the Turkish company must also have its own Memorandum and Articles of Association drafted and notarized. The branch office will also require the preparation of a set of documents needed for company registration in Turkey. Our law firm in Turkey is specialized in offering complete company registration services no matter the chosen business form. When it comes to the liaison office, this is not considered a commercial entity, its main role is that of prospecting the market on behalf of a foreign company before the establishment of a subsidiary or a branch office. It is very common for foreign companies to set up representative offices for one of the following purposes:
 
  • for completing marketing and research activities;
  • for expanding the foreign company’s client database;
  • for establishing new business connections with Turkish companies and investors;
  • for acting as a contact point with existing clients and partners.

 

We can also assist with the creation of a liaison office which also requires registration with the Trade Register. The establishment of a representative office in Turkey is simpler than that of another business form, as it will not undertake any commercial activity. When it comes to the taxation of these entities in Turkey, there is an important difference between the subsidiary and the branch office: the subsidiary will be taxed as a local company on its worldwide income, while the branch office will be imposed the corporate tax on the income earned in Turkey. In both cases, the foreign company will be required to file consolidated financial accounts. Representative offices do not carry out any commercial activities, therefore they will not be subject to taxation in Turkey.

 

The main steps to register a company in Turkey

 

There are 4 main steps are required in order to incorporate a legal entity in Turkey:
 
  1. After elaborating and signing the articles of association, the document must be notarized along with the signature declaration of the managers and the commercial books of the entity.
  1. 0.04% from the capital has to be deposited at the Competition Authority and the minimum share capital has to be deposited in a bank, which will issue a certificate of paid-in capital.
  1. After that, the applicant must comply to the requirements of the Trade Registry Office and file the incorporation notice form, commitment letter, and Chamber registration statement.
  1. The company must register for taxation purposes, obtain a VAT number with the tax authorities and register with the social security administration – all steps are completed at once.
 

What is the minimum share capital of AS and LS?

 

The minimum share capital of a limited liability company (LS) is 10.000 TRY, which has to be deposit in a single installment at registration, while the minimum share capital of a joint stock company (AS) is 50.000 TRY.

 

What documents are required for the incorporation of a company in Turkey?

 

The following documents are required for the company registration process in Turkey:
 
  • the company’s memorandum and articles of association of the company;
  • the notarized copies of the identification papers of the company’s shareholders;
  • the notarized copies of the identification papers of the company’s directors;
  • the notarized copies and original form of the declaration of the establishment of the business. 

 

Other requirements are:

 

  •  the original receipt from the bank, proving that the 0,04% from the capital were deposited to the Competition Authority,
  •  the certificate of deposit of the minimum capital.

 

For tax reasons, the company has to submit the certificate of registration, which will contain the tax number. The investor must also present a letter of undertaking, as stated by the Trade Registry Regulation. Alongside with the bank receipt, stating the deposit of the minimum capital, the bank must also issue a letter in this sense, which will be added to the documentation necessary for the registration of the company

 

Licenses and permits for companies in Turkey

 

It must be noted that no matter if you are a local or foreign investor who opens a company in Turkey, obtaining the specific licenses and permits connected to the type of activity completed, is mandatory. These licenses are issued by the authorities in the field in which the company will operate and are treated separately from the company registration procedure in Turkey. In order to obtain any type of license, the company must submit the company’s Certificate of Registration and other relevant documents required by the authorities. The issuance of any license will depend on the authority reviewing the documentation. 

 

How quickly can I incorporate my company in Turkey?

 

If you have provided all the documents required for the registration of the company, the incorporation process may take up to 3 weeks (this period is calculated taking into account the time necessary to set up an office here, but also the registration for tax compliance). 

 

Other questions on company registration in Turkey

 

  1. Do I need a local address for my company in Turkey?
Yes, the company needs to have a registered address in Turkey.
 
  1. How long does it take to open the company’s bank account?
The bank account opening process can take 3 weeks to complete.
 
  1. Do I need to come to Turkey to register the company?
No, you do not need to come to Turkey. Our Turkish lawyers can handle the process on your behalf.
 
  1. Does the company need a local director?
No, the company does not need a Turkish resident director.
 
  1. What is the corporate tax in Turkey?
The taxation of Turkish companies implies a 20% tax rate.

 

If you need further information on the legal assistance provided for the incorporation procedure, you may contact our attorneys in Turkey. Our Turkish lawyers can offer specialized support to those who want to register their businesses in this country, no matter the chosen form. We can also offer guidance related to the business permits requirements to operate in Turkey.