The Turkish government always seeks to attract investments of a wide variety to its territory, aiming at obtaining the highest economic ranks in the world. That is why it issued many laws that promote investment in Turkey; like foreigners’ property ownership law, and disposed of all the bureaucracies related to establishing a commercial activity and lowering costs and taxes. The investment attraction law depends on the principle of equality between local and foreign investors, so that everyone has the same rights and duties.
Foreign investors have the right to establish commercial companies and activities following the same conditions that apply to the Turks. Nowadays, the companies are being established at the Trade Registry Offices present in the Chamber of Commerce that was designed to form an integrated service complex. The proceedings are finalized at the same day.
Here, we must mention, even briefly, the most important reasons that make Turkey an appropriate choice for investment:
- Its openness to Arabic and European markets
- The substantial and accelerated economic growth
- High quality Turkish products and their superiority over those of neighboring countries.
- The many and different facilities offered by the Turkish government to foreign investors on all fronts.
Types of companies in Turkey
In Turkey, there are 4 categories of companies; each category depends on the volume of the company’s commercial activity:
- Unlimited companies
- Limited Partnership companies
- Limited Liability companies
- Joint Stock companies
Unlimited companies are established to run a commercial business under a specific name and the liability of some of the partners is limited to the subscribed capital, while some partners have unlimited liability. There is no minimum capital requirement.
Limited Partnership Companies
These companies are established to run a commercial business under a specific commercial name and the liability of the partners is limited only to the subscribed capital paid by the partners. There is no minimum capital requirement.
Limited Liability Companies
Limited company is established through at least one legal entity, maximum 50. The liability of the partners is limited to the subscribed capital. Minimum capital requirement for one person to establish a company is 15.000 Turkish Lira.
Joint Stock Companies
In this type of companies, the company capital is divided into shares and the liability of the partners is limited to the subscribed capital paid by shareholders. Joint stock companies are established with at least five shareholders and the minimum capital requirement is 50.000 Turkish Lira.
Most investors in small to mid-scale projects prefer to establish a limited liability company. The percentage of foreigners’ ownership of companies in Turkey is 100%. We will explain in details the steps of establishing a company in Turkey.
Documents needed from the investor to establish a company in Turkey
- A copy of the passport, provided that it is valid for at least six months together with a Turkish entry stamp, translated and certified by the Turkish Public Notary.
- Tax number obtained from the Tax Offices stationed in every region
- 3 personal photos
- Security clearance permitting company establishment
Steps of establishing a company in Turkey
- Determining the company’s headquarter, whether it was an office or a store, is a prerequisite for establishing the company.
- Depositing 25% of the company’s capital in one of the Turkish banks. As the Turkish Law’s transaction with the companies in Turkey differs according to the company’s capital, it is advisable to provide a capital of at least 1oo thousands Turkish Lira in order to get additional privileges like: obtaining a work permit and worker’s residence permit for both the company’s owners and employees.
- Preparing all the necessary documents and forms and notarizing the company’s Articles of Association by the Turkish Public Notary. The intended Articles of Association is the company’s Article of Incorporation which outlines all the company’s details, including the nature of the enterprise and its activities, its address and its manager, under the supervision of the Public Accountant whose responsibility is to represent the company before the state. The presence of the Public Accountant is a prerequisite and his absence is considered a violation of the law, the penalty for which may be up to shutting down the company.
- Obtaining a tax number, as companies are dealt with as a legal personality that has its own tax number, from the Inland Revenue after finishing with the Article of Incorporation and its notarization.
- Registering the company at the Trade Registry Office and the Chamber of Commerce.
- Notarizing the signature of the company’s manager at the Turkish Public Notary so that he becomes the person authorized to sign in the name of his company.
After these proceedings are completed, the company’s trade registry is considered active and approved in Turkey and the stockholders become the actual owners of this company. The company’s Articles of Association are then publicly published in the Official Gazette of the Turkish Land Registry.
Alfares Real Estate Investment team will answer all your questions regarding establishing the companies and explain all the required information together with offering the necessary legal consultancy in that regard.