Turkey

4 Chapter Incorporation

    • Type of Business establishment in Turkey

      The Joint Stock Company;

      The Limited Liability Company;

      The Commandite Company;

      The Collective Company;

      The Cooperative Company; 

      Branches.

       

       

      ■Local subsidiary   

      Foreign investors interested in expanding their business in Turkey can choose to open a subsidiary of the parent company abroad. The subsidiary company is separated from the parent company and can be established as a new company incorporated in Turkey. The subsidiary company must observe all of the taxation laws in Turkey.

      Investors from countries which have signed double tax avoidance treaties with Turkey can benefit from a single taxation of the profits produced in Turkey. Foreign investors can also be benefited from minimized withholding taxes on dividends or even an exemption from paying this tax. 

       

      ■LTD

      Is a company formed by two or more real or legal persons, having a corporate title and a fixed capital and with a liability limited to the corporate assets. The liability of the shareholders is towards the company and is limited with their share of the capital. The company is managed by a board of directors.

       

      ■A.S

      If the company possessing a trade name, whose capital is determined and divided into shares, being liable for its debts only up to the amount of its estate. The liability of partners is limited by the shares of capital subscribed by them. 

       

      ■How to advance into Turkey´s market except for Local subsidiary

      - The joint-stock company (A.S.)

      •A JSC shall be established by a contract among the shareholders. The contract must be in a written form and signatures shall be authenticated by public notary. The contract used for the incorporation of JSC's is called "Articles of Association" (‘AOA'). The AOA must contain the following information.

      •(i) Headquarters and corporate title of the company;

      •(ii) The objective of the company;

      •(iii) Main capital, nominal value of shares, number of shares and the conditions of payment;

      •(iv) In case of capital commitment in kind (rather than or together with cash), the value appraised for the in kind capital;

      •(v) Special privileges if any are present for shareholders, directors or other persons;

      •(vi) Provisions concerning the election of the members of Board of Directors and statutory auditors; their rights and duties and the persons authorized to represent the company;

      •(vii) Rules related to general assembly meetings;

      •(viii) The duration of the Company;

      •(ix) The form of announcements of the company;

      •(x) Portion of the capital each shareholder has subscribed for.

      •The above listed subjects are the compulsory minimum of the content of AOA. The shareholders are free to insert any other provisions they may think appropriate for the operation of the company as long as they comply with the mandatory rules.

      •It is permitted under Turkish law for the shareholders to sign and execute individual agreements between themselves and/or regulate all aspects of shareholder relations such as in the form of a “Shareholders Agreement”. It is agreed that the JSC itself could become a party to those kinds of individual contracts.

      •Pursuant to the relevant Articles of TCC, a JSC must have three organs to function:

      1) Shareholders General Assembly;

      2) Board of Directors

      3) Statutory Auditors.

       

       

      - The limited liability company (L.T.D)

      •At least one shareholder is required for this business form and a minimum share capital of 10,000 TRY. The company is managed by a board of directors.

      •TCC requires two bodies for management and representation of the LLCs:

      1) Shareholders General Assembly and

      2) Directors of LLC.

       

      The commandite company;

      The collective company;

      The cooperative company; 

       

      ■Branches

      A branch is essential extension of the Parent Company outside the country. This is a good thing as the incorporation costs will generally be lower than in the case of a new Company or an Subsidiary Company and it can commence its activities in Turkey much faster. On the other hand, the branch is fully dependent on the Parent Company that is fully liable for the debts and obligations of the Turkish branch. Like any other legal entity in Turkey, the branch must be registered at the Trade Register. Before registering the company, a set of documents need to be drafted and prepared in order for the representatives of the branch to be able to make the application for registration.
       
       

    • Establishment procedure of LTDA

      ■Incorporation

      · An LLC can be formed by minimum of two (2) and maximum of fifty (50) real or legal person shareholders with a minimum capital of 5,000 TRL (equivalent of approximately 3570 USD.-). Statutory auditors shall be appointed to LLC's having more than twenty (20) shareholders in accordance with Article 548/I of the TCC.

      · Similar to JSC's, AOA of an LLC shall be drawn up in writing, the signatures of the founders shall be authenticated by a public notary and the following items shall be designated in the AOA:

      · (i) The seat and the corporate title of the company;

      · (ii) The subject matter of the company;

      · (iii) The capital and the committed of each shareholders towards the capital;

      · (iv) Duration of the company;

      · (v) Time and method for the distribution of the dividends;

      · (vi) Amount of the reserves;

      · (vii) Appointment of the company officers.

      · Along with AOA and other relevant documentation of the shareholders, the LLC shall be registered to the Register of Chamber of Commerce at the district of its headquarters. The company acquires legal personality (entity status) at the completion of such registration. Following the registration, LLC must apply to the tax office to register and to obtain a tax number in order to operate commercially.

       

    • Establishment of Joint Stock Company

      ■ After the notarization of the AOA through the Public Notary, the company shall be registered to the Register of Chamber of Commerce at the district of its headquarters. The company acquires legal personality (entity status) at the completion of such registration. Following the registration, JSC must apply to the tax office to register and to obtain a tax number in order to operate commercially.

    • Establishment of a Branch

      ■ The application for registering a branch in Turkey must be signed by the authorized representative of the company and submitted to the Ministry of Industry and Trade. The application must include the following documents:

       

      · Identification details for the parent company - name, nationality, date of establishments, address and capital;

      · Identification details for the appointed authorized representative of the Turkish branch;

      · A copy of the company’s articles of association;

      · The authority of attorney that empowers the appointed representative, to take any legal action in Turkey on behalf of the branch.

       

      All the documents must be submitted in Turkish as certified and legalized translations. After the application is submitted to the Ministry, the company must also submit the necessary documents to the Trade Registry Office. They include: the permit to open the branch obtained from the Ministry of Industry and Trade, a special application form, notarized and legalized copies of the power of attorney for the branch representative and other letters and declaration forms.

    • Liquidation of (LTDA)

      1 Selection of liquidator

      Liquidators shall be appointed by the Articles of Association (AoA) or by a resolution of the General Assembly and accordingly dismissed with a similar procedure.

      2 Dissolution

      3 Calling and holding of general meeting, submission of B/S

      4 Division of residual assets and acquittal of debt

      5 Completion of Liquidation