Corporate Forms and Company Establishment Guide

Establishing a Company

Steps to Establish a Company in Turkey

1. Submit the memorandum and articles of association online to MERSIS:

   MERSIS (Central Registry Record System) is a central registry system for carrying out commercial registry processes and storing commercial registry data electronically on a regular basis. A unique number is given to legal entities that are actively involved in business. Online establishment of new companies is possible on MERSIS and already-established companies may operate through the system after the transfer of their records.

2. Execute and notarize company documents:

   The following documents are required for registration application at the relevant Trade Registry Directorate:

   Articles of incorporation signed by all the founders before Trade Registry Directorate authorized personnel

   For each real person shareholder two copies of their passports (translated notarized copy of passport; if residing in Turkey notarized residence permit tax identification number obtained from the tax office.)

   The Certificate of Activity of the legal entity designated as the shareholder issued by the relevant authority in the investor’s country. The certificate must bear information regarding the current status and signatories of the company.

   Resolution(s) of the shareholders of the competent corporate organ of legal entity shareholder(s) authorizing the establishment; if there is any specific condition for the prospective company to be incorporated (name of the company, field of activity, etc.) it must be stated in the resolution for the sake of clarity.

   In case a legal entity is going to be appointed as a member of the board of directors of the prospective company to be incorporated, the name of the real person who will act in the name of the legal entity and the legal entity’s board member’s appointment must be stated within the same or with a separate resolution for the sake of clarity.

   If the process is going to be followed by proxy, a notarized copy of a power of attorney authorizing the attorneys who will follow up the application before the competent Trade Registry Directorate and other official authorities in order to proceed with the application (where applicable).

   Notarized signature declarations (two copies)

   Notarized identity cards of the company managers (one copy)

   It should be noted that except the first item above, all necessary documents that will be issued and executed outside of Turkey must be notarized and apostilled or alternatively ratified by the Turkish Consulate located in the country of transaction. The original executed notarized and apostilled documents must be officially translated and notarized by a Turkish notary.

3. Obtain potential tax identity number:

   The company must obtain potential tax identity numbers for non-Turkish shareholders and non-Turkish board members of the company from the relevant tax office. This potential tax identity number is necessary for opening a bank account in order to deposit the capital of the company to be incorporated.

   The documents required by the tax office are as follows:

   Petition requesting registration

   Articles of association (one original)

   Copy of the tenancy contract showing the registered address for the company

   If the process is going to be followed by proxy, a power of attorney must be issued specifically showing the authority to act on behalf of the company before the tax authority in order to obtain a tax identity number or potential tax identity number.

4. Deposit a percentage of capital to the account of the Competition Authority:

   0.04 percent of the company’s capital must be paid to the account of the Competition Authority via Trade Registry Directorate pay office.

5. Deposit at least 25 percent of the startup capital in a bank and obtain proof thereof:

   25 percent of the subscribed share capital must be paid prior to the new company registration. The remaining 75 percent must be paid within two years. Alternatively, the capital may be fully paid prior to registration.

   However, the requirement for paying 25 percent of the capital during establishment before the registration of the company is not applicable to limited companies. Subscribed capital for limited companies may be paid within the 24 months following the establishment of the company.

6. Apply for registration at the Trade Registry Directorate:

   The founders may apply for registration after gathering the following documents:

   Petition requesting registration

   Three copies of the incorporation notification form

   Articles of incorporation signed by all the founders before Trade Registry Directorate’s authorized personnel

   Payment made to the bank account of the Competition Authority (0.04 percent of the company’s capital)

   Two copies of the signature declarations for each person authorized to represent the founders of the limited liability company

   Founders’ declaration (one original)

   Chamber of Commerce registration form (two different forms for two different shareholder types: real person shareholder or legal entity shareholder)

   The written statement of non-shareholder members of board of directors that states acknowledgment of this duty

   Bank certificate of the paid-in minimum capital deposit (at least 25 percent of subscribed capital). If there will be any capital contribution in kind:

   The expert report regarding the capital in kind

   The statement of the relevant registry office indicating there is no limitation on the capital in kind

   The document indicating the annotations have been done to relevant registries regarding the capital in kind

   The written agreements between founders, other persons, and the founding company regarding the foundation of the company

   Following completion of the registration phase before the Trade Registry Directorate, the Trade Registry Directorate notifies the relevant tax office and the Social Security Institution ex-officio regarding the incorporation of the company. The Trade Registry Directorate arranges an announcement in the Commercial Registry Gazette within approximately 10 days after the company registration. A tax registration certificate must be obtained from the local tax office soon after the Trade Registry Directorate notifies the local tax office.

   A social security number for the company must be obtained from the relevant Social Security Institution. For the employees, a separate application has to be made following the registration of the company with the Social Security Institution.

7. Certify the legal books:

   The Trade Registry Directorate’s authorized personnel will certify the following books during the establishment process:

   Journal

   Ledger

   Inventory book

   Share ledger

   Manager’s meeting minutes book

   General assembly meeting minutes book

8. Follow up with the tax office on the Trade Registry Directorate’s company establishment notification:

   The Trade Registry Directorate notifies the tax office and the Social Security Institution of the company’s incorporation. A tax officer comes to the company headquarters to prepare a determination report. There must be at least one authorized signature in the determination report. The Trade Registry Directorate sends the company establishment form which includes the tax number notification to the tax office.

9. Issuance of signature circular:

   On the day the company is registered at the Trade Registry Directorate, the signatories of the company shall issue a signature circular before authorized Trade Registry Directorate personnel.

10. Move certain documents to electronic format / E-TUYS system:

    The following documents that were previously submitted in printed form to the General Directorate of Incentive Implementation and Foreign Investment (GDIIFI) by companies and branches established in Turkey by foreign investors may now be received electronically:

    Activity Information Form for FDI

    FDI Capital Data Form

    FDI Share Transfer Data Form

    The information in these forms will only be received electronically via a web-based application called E-TUYS that was developed to expand the data system about FDI and help obtain up-to-date information faster and is managed by the GDIIFI. Therefore these forms will no longer be received in printed format.

    Investment Guide: Establishing a Business in Turkey
    

    Turkey’s FDI Law is based on the principle of equal treatment and allows international investors to have the same rights and liabilities as local investors. The conditions for setting up a business and the transfer of shares are the same as those applied to local investors. International investors may establish any form of company set out in the Turkish Commercial Code (TCC), which provides for a corporate governance approach that meets international standards, fosters private equity and public offering activities, creates transparency in managing operations, and brings the Turkish business environment in compliance with EU legislation as well as with the EU accession process.

    Turkey has initiated reforms to make it easier to do business, enhancing the investment environment by eliminating red tape in setting up a business and minimizing costs and procedures. To this end, establishing a company is now only carried out at Trade Registry Directorates located in Chambers of Commerce and designed to be a ‘one-stop shop’. The process is completed within the same day.

    Company Types under TCC

    Corporate Forms

    • Joint Stock Company (JSC)
    • Limited Liability Company (LLC)

    Although some financial thresholds (i.e., minimum capital) and organs differ from each other, the procedures to be followed for establishing a JSC or an LLC are the same.

    Non-Corporate Forms

    • General Partnership
    • Limited Partnership
    • Partnership Limited by Shares

    Although companies may be established according to these five different types, JSC and LLC are the most common types chosen both in the global economy and Turkey.

Corporate Forms

Joint Stock Companies (A.Ş.)

A joint stock company is a company with a specified capital divided into shares and is liable for its debts only to the extent of its assets. Joint stock companies can be established for any economic purpose and subject that is not legally prohibited. Generally, the transfer of shares does not require the approval of the general assembly. Shareholders can freely transfer their shares to others. Joint stock companies can issue registered and bearer shares to represent ownership. They can also issue bonds and other debt instruments. It is possible to establish a joint stock company with a single shareholder. Both natural and legal persons can be shareholders. Shareholders are liable towards the company only up to the amount of capital they have committed. A joint stock company must have articles of association that are registered in the trade registry where the company is headquartered. Joint stock companies are the only type of company whose shares can be publicly offered and traded on the stock exchange. Joint stock companies that engage in certain activities or exceed thresholds in terms of balance sheet total, annual net sales, and number of employees are subject to independent auditing. The minimum capital requirement is 250,000 Turkish Lira. For non-public joint stock companies adopting the registered capital system, the initial capital must be at least 500,000 Turkish Lira. At least one quarter of the nominal value of cash-committed shares must be paid before registration. The remaining amount must be paid within 24 months following the registration. The payment schedule can be arranged in the company’s articles of association or determined by the board of directors. 

The two main bodies of a joint stock company are:

• General Assembly:
  As a rule, it is the body exclusively authorized to make significant decisions about the company (e.g. amending the articles of association, electing the board of directors, selecting auditors, dissolution of the company), represented by all shareholders.

• Board of Directors:
  Primarily responsible for the management and representation of the company. The board of directors can consist of just one member. There is no requirement for board members to be Turkish citizens or residents in Turkey. Banks, financial leasing companies, factoring companies, consumer financing and card services companies, asset management companies, insurance companies, joint stock holding companies, foreign exchange bureaus, general retail companies, licensed warehousing companies for agricultural products, specialized product exchange companies, independent auditing firms, supervisory companies, technology development zone managing companies, companies subject to the Capital Markets Law No. 6362, and free zone founders and operators must have their establishment and changes to their articles of association approved by the Ministry of Trade. 

Limited Liability Companies (Ltd. Şti.)

A limited liability company is a company with specified capital divided into shares and is liable for its debts only to the extent of its assets. A single-partner limited liability company can be established. The number of partners cannot exceed fifty. Partners in a limited liability company can be either natural persons or legal entities. Partners are not responsible for the company’s debts but are obligated only to pay their committed share of the capital and to fulfill any additional payment obligations and ancillary services stipulated in the company agreement. Partners are liable up to their share of the capital for public debts of the company that cannot be collected. The minimum capital of a limited liability company is 50,000 Turkish Lira. All cash brought in as capital must be paid within 24 months after the company’s registration. The payment schedule can be arranged in the company agreement or determined by the directors. A limited liability company must have a company agreement that is registered in the trade registry where the company is headquartered. Limited liability companies cannot issue bearer shares. Limited liability companies cannot be publicly offered. The transfer of shares in a limited liability company is subject to the approval of the general assembly. 

The two main bodies of a limited liability company are:

• General Assembly:
  As a rule, it is the body exclusively authorized to make significant decisions about the company (e.g. amending the company agreement, selecting directors, appointing auditors, dissolution of the company), represented by all shareholders.

• Board of Directors:
  Primarily responsible for the management and representation of the company. It is possible for the company to have just one director. At least one of the directors must be a partner of the company. There is no requirement for directors to be Turkish citizens or residents in Turkey.

Differences Between JSC and LLC 

Branch Office

A branch office is not an independent legal entity and does not have shareholders. Its duration is limited to the duration of the parent company. While there is no capital requirement, it is wise to allocate a budget for the operations of the branch office. A branch office may be incorporated only for the same purposes as those of the parent company. The repatriation of branch profit is allowed, and the branch profit transferred to the headquarters is subject to dividend withholding tax at a rate of 15 percent, which may be reduced by Double Taxation Prevention Treaties. 

Liaison Office

A liaison office, also known as a representative office, is established by a company in a foreign country to facilitate communication and coordination between the parent company and its clients, suppliers, or other business partners in the host country. These offices are typically used for non-commercial activities such as market research, business development, and information gathering. They do not engage in direct sales or revenue-generating activities and are generally restricted from conducting commercial transactions. The primary purpose of a liaison office is to represent the parent company, promote its interests, and explore business opportunities in the host country without engaging in actual business operations there. Any company incorporated under the laws of a foreign country may establish a liaison office in Turkey upon obtaining a license from the Ministry of Industry and Technology, provided that the company does not engage in any commercial activities in Turkey. 

General Partnership

A General Partnership is a business arrangement where two or more individuals agree to share all assets, profits, and financial and legal liabilities of a jointly-owned business. In a general partnership, partners have unlimited liability, meaning their personal assets can be used to satisfy the partnership’s debts. 

Limited Partnership

A Limited Partnership consists of one or more general partners who manage the business and are personally liable for its debts, and one or more limited partners whose liability is limited to their investment in the partnership. Limited partners do not participate in the day-to-day management of the business. 

Partnership Limited by Shares

A Partnership Limited by Shares is a type of partnership where the capital is divided into shares. It includes both general partners, who have unlimited liability and manage the business, and shareholders, whose liability is limited to the amount of their shares. This structure combines elements of both partnerships and corporations. 

Establishments: 

Joint Stock Company Establishment:

• It is established by registration in the Trade Registry Office and announcement in the Turkish Trade Registry Gazette. Firstly, the Articles of Association of the Company are prepared through the MERSIS system. The prepared Articles of Association are approved at the Trade Registry Office. Subsequently, the founding partner or partners are present at the Trade Registry Office with the following documents in person or with the person they have given power of attorney. At least one authorized person must represent and bind the company with his/her individual signature. 

1. Petition 
2. Chamber registration declaration 
3. Establishment form 
4. Declaration of acceptance of duty for non-partner managers 
5. At least ¼ of the committed capital can be paid to the cashier of the Registry Office or can be deposited in the bank under the title of the company as capital commitment and the receipt and the letter to be received from the bank must be brought to the Registry Office. The remaining amount must be paid within 24 months.
   
6. In case of capital in kind: 

• Expert appointment decision. 

• Original or notarized copy of the court’s expert appointment decision. 

• Expert report. 

• The original or notarized copy of the expert report on the valuation prepared by the experts appointed by the court regarding the determination of the value of the capital in kind and the enterprises and assets in kind to be taken over during the establishment. Court decision. 

• Original or notarized copy of the court decision regarding the approval of the expert report. 

• The original of the letter to be obtained from the relevant registry stating that there is no restriction on the capital in kind. 

• Original document indicating that the immovable property, intellectual property rights, and other values placed as capital in kind have been annotated in the registries where they are registered. 

Limited Company Establishment:

• It is established by registration in the Trade Registry Office and announcement in the Turkish Trade Registry Gazette. First of all, the Articles of Association of the Company are prepared through the MERSIS system. The prepared Articles of Association are approved at the Trade Registry Office. Subsequently, the founding partner or partners apply to the Trade Registry Office by appointment with the following documents in person or with the person they have given power of attorney at the registry office. At least one partner must have full representation and authorization. 

1. Petition 
2. Chamber registration declaration 
3. Establishment form 
4. Declaration of acceptance of duty for non-partner directors 
5. The committed capital can be paid to the cashier of the registry office or it can be deposited in the bank as a capital commitment under the company title and the receipt and the letter to be received from the bank should be brought to the registry office. Alternatively, limited company capital can be paid within 24 months.
6. In case of capital in kind: 

• Expert appointment decision. 

• Original or notarized copy of the court’s expert appointment decision. 

• Expert report. 

• The original or notarized copy of the expert report on the valuation prepared by the experts appointed by the court regarding the determination of the value of the capital in kind and the enterprises and assets in kind to be taken over during the establishment. Court decision. 

• Original or notarized copy of the court decision regarding the approval of the expert report. 

• The original of the letter to be obtained from the relevant registry stating that there is no restriction on the capital in kind.

Original document indicating that the immovable property, intellectual property rights, and other values placed as capital in kind have been annotated in the registries where they are registered. 

Branch Establishment

• Petition (must be signed either by an authorized signatory under the company seal or by proxy; if signed by the latter, then the original or the notarized copy of the power of attorney must be attached to the petition) 

• The resolution of the competent organ of the parent company to open a branch 

• A certified original copy of the parent company’s articles of association 

• Certificate of Activity of the parent company or any equivalent documentation that sets forth registration and current status of the parent company 

• A power of attorney granted by the parent company in favor of its resident representative assigning full representation and accountability 

• Five copies of the Establishment Declaration Form (the related fields must be filled and signed by the authorized person) 

• Two copies of the power of attorney stating the representative in Turkey 

• If the branch representative is a Turkish national, a notarized copy of his/her ID card. If not, a notarized copy of the authorized representative’s passport translated into Turkish 

• Two copies of the signature declarations of the branch representative under the branch title 

• A letter of commitment (must be signed by an authorized person) 

• A Chamber Registry Declaration Form Statement to be obtained from the Trade Registry Directorate (including photographs of the branch representatives) 

• It should be noted that all the necessary documents that will be issued and executed outside Turkey must be notarized and apostilled or alternatively ratified by the Turkish consulate where they are issued. The original executed notarized and apostilled documents must be officially translated and notarized by a Turkish notary.

Liaison Office Establishment

• Application form 

• Statement outlining the works to be conducted by the liaison office, an undertaking that the office shall not engage in any commercial activities, and proof that the signatory to the statement is fully authorized by the company 

• A certificate of activity issued by the foreign country and verified by the relevant Turkish Consulate or in accordance with the provisions of the Hague Convention Abolishing the Requirement of Legalization for Foreign Public Documents (the Apostille Convention) 

• A certificate of activity issued to foreign companies or balance sheet and income statement 

• A certificate of authorization issued to the individual(s) appointed to conduct the activities of the liaison office 

• A power of attorney in the event that the procedures for establishing the liaison office are carried out by another representative 

• During the initial application for liaison offices, licenses are granted for a maximum of three years within the scope of the declared activities. Liaison offices willing to extend their term of operation shall apply to the GDIIFI before the expiration of their terms of operation. The GDIIFI may conclude applications for the extension of their tenure based on the nature of activities of the office over the previous year, business plan, the company’s future objectives in Turkey, existing and anticipated amount of expenditure, and the number of employees. The tenure of operation of offices licensed to conduct market research or promotion of foreign company products or services shall not be extended. 

• Applications for establishment and tenure extension shall be concluded in fifteen working days from the date of application, provided that the requested information/documents are complete and accurate. 

• Applications submitted by foreign companies to set up a liaison office to conduct financial activities subject to special legislation such as money and capital markets or insurance shall be evaluated by competent agencies such as the Capital Markets Board of Turkey and the Banking Regulation and Supervision Agency – both being the duly authorized bodies pursuant to special legislations. The ministry may conclude foreign companies’ applications to set up liaison offices in other industries that require licenses for operations or similar authorizations if necessary upon consulting competent bodies that are duly authorized to issue such permits or licenses. 

• Copies of tax registration and tenancy agreement for the liaison office shall be submitted to the GDIIFI within a maximum of one month. Liaison offices shall notify the GDIIFI of any changes with regard to the office representative(s) or foreign company title within a maximum of one month following the change. Liaison offices shall produce a new tenancy agreement comprising the new address, the certificate of authorization of the newly appointed representative, or the document(s) related with the change of title of the foreign company.

• In the event that a liaison office terminates its operations, it shall furnish the GDIIFI with a statement of termination obtained from the relevant tax office. Offices may not claim transfers of funds except for balances that remain outstanding upon termination and liquidation thereof.