Company Establishment

THE ISTANBULCHAMBER OFCOMMERCE

COMPANY ESTABLISHMENT AND

REGISTRATION PROCEDURES

IN TURKEY

IN ACCORDANCE WITH

NEW ADJUSTMENTS

IN THE LEGISLATION

TH

EIS

TAN

BUL CHAMBER OF COMM

ER

CE

1882

2005

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FOREIGN DIRECT INVESTMENTLAW IN BRIEF

The main elements of the new “Foreign Direct Investment Law”are the following;

l All former FDI related screening and approval procedureshave been abandoned for business set ups and share transfers.Foreign investors will no longer be required to obtain pre approvalfor these transactions, except for some designated sectors. Theconditions for business set ups and share transfers will be the sameas for comparable local investors.

l Pre approval requirements for certain transactions offoreign investment companies have also been eliminated. Foreigncapital companies will follow the same procedures as localcompanies to realise these transactions.

l The minimum capital requirement of USD 50,000 pereach foreign shareholder has been abolished.

l Foreign investors will be able to form a partnership inTurkey. In the old regime, foreign investors were only allowed toform a joint stock company or a limited company. Now, any formof company included in the Turkish Commercial Code is acceptablefor foreign investment.

l Valuations of international credit agencies as well as courtsor competent authorities of the investor’s country will be acceptedas valid in the determination of the share value for marketablesecurities that are contributed as capital in-kind.

The new “Foreign Direct Investment Law” has alsoreassured the foreign investors’ existing rightson a stable document;

l The foreign investment legislation isbased on the principle of equal treatmentfor the domestic and foreign investors.Generally foreign investors have the sameprivileges and obligations as the domestic capital.

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l Foreign capital companies established in Turkey have thesame rights to acquire a real estate as domestic investors. Foreignreal persons may own a real estate according to the principle ofreciprocity.

l Foreign capital entities can employ foreign personnel inTurkey, provided that the work permits are obtained from Ministryof Labour.

The new Law has retained the permission requirement for LiaisonOffices. Liaison offices are special type of offices whose mainactivity is to conduct market research and feasibility studies andto accumulate investment opportunities in the Turkish market onbehalf of their head offices. They are not allowed to carry on anycommercial activity. Foreign investors are required to obtainpermission from General Directorate of Foreign Investment toopen a liaison office in Turkey. The initial permission is given for3 years, which can be extended depending on the activitiesperformed in the last 3 years and future plans of the head office.

In terms of this new law, Turkish nationals who verify with workor resident permit, domiciled abroad are deemed as foreigninvestors.

THE FORMS OF COMPANIESWHICH CAN BE ESTABLISHED

Within the framework of the current Turkish Trade law, Thenature of establishing a business activity is mainly described inthree ways such as Merchants, Commercial Partnership and Co-operatives.

1)Merchants (Single Proprietorship): The person who is runningthe commercial establishment individually is accepted as a firm.

2)Commercial Partnership: Commercial Partnership Companiesare divided as follows:

Joint Stock Company: The company’s stock capital is divided intoshares and the liability of the share holders is restricted with the

capital subscribed by the shareholder. At least 5 share holders(real person or legal entity) and minimum capital of 50.000 NTLis mandatory.According to the current Turkish Trade Law, banks, private financeinstitutions, insurance companies, financial leasing companies,factoring companies, holding companies, companies operating asforeign currency exchange offices, companies dealing with publicwarehousing, publicly held companies subject to the CapitalMarkets Law, companies that are founders and operators of freezones should be established as Joint Stock Associations and thesecompanies are still subject to permit from Ministry of Industryand Trade for their foundations.

Limited Company: It is the company established with participationof minimum 2 and maximum 50 real person or legal entities. Theliability of the shareholders is restricted only to the capital subscribedby the shareholder. Minimum capital of 5000 NTL is mandatory.Unlike Joint stock companies no stock certificate is issued.

Collective Company: This is an association which has beenestablished with the purpose of engaging in commercial activitiesunder a common trade name. Its most important characteristicis the unlimited liability of the partners for the debt of theassociation. No minimum capital is required It is mandatory thatall share holders should be real person. The relationship betweenshare holders is designated in the articles of association freely.

Commandite Company: In this form of business company, someof the partners are liable for the association's debts in the amountof capital which they contributed, while the other partners haveunlimited liability. Those partners with unlimited liability arecalled active partners (commandite) and those with limited liabilitysilent partners (commanditer). Legal entities can only becommandite. No minimum capital is required.The relationship between share holders isdesignated in the articles of association freely.

3) Co-operative Association: This is a businessassociation established by persons who wantjointly to supply various needs connectedwith their professions, crafts, and livelihoods.

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Such an association is based on the principle of mutual help andsuretyship. Arrangements related to co-operative associations aregoverned by the Co-operatives Law.

COMPANY ESTABLISHMENTPROCEDURES

Although the required documents for establishing the abovedescribed companies almost will be the same, however it differsin accordance with either preferred type or way of participationto the partnership.

According to the current legislation, all the documents andstatements described here below should be submitted to the TradeRegistry Offices located at the province where the company orpartnership will be established .

Since 1996 Istanbul Trade Registry Office has been fulfilling itsactivity in the building of The Istanbul Chamber of Commerce,with its branches located in Kad›köy, Perpa and Istoç.

The documents delivered to Trade Registry Offices should get theofficial approval after their examination of whether all given anddescribed conditions on the documents and statements are incompliance with legislation and clear that all the rights of thirdperson is covered.

Trade Registry Offices have the refusal right for the registrationrequests which are inappropriate to legislation.

The company can start to operate its business activity after theapproval and registration of Trade Registry Offices by receivingregistration number which is unique for every established company.

In Istanbul Trade Registry Office, all registered documents andstatements are being computerised and also filed in companydossiers as well.

Company registrations and participations are announced to thethird person or related parties through being published on Turkish

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Commercial Registration Newspaper by Trade Registry Offices inAnkara.

The related copies of this official newspaper which is publishedonly in Turkish are also computerised and filed in the relatedcompanies’ dossiers.

All registrations formalities are liable to chargesannually declared by Ministry of Finance andthe fees for publicity on Turkish CommercialRegistration Newspaper are determinedby Union of Chambers in Ankara.

The general principal of establishinga company is tried to be describedon the attached road map.

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ROAD MAP OF ESTABLISHINGA COMPANY IN TURKEY

Notarisation ofarticles of

association

Operationstarted

Registration attax office

Companyestablished

Delivery ofrequired

documents totrade registrytogether with

companyestablishment

form

1 DAY

l The forms of Chamber Registration Statement,Establishment Statement and Letter of Commitment which arementioned among the requested documents are available on ourweb site and can be also provided from our Chamber and itsbranches.

1. DOCUMENTS REQUIREDFOR MERCHANT REGISTRATION:

1. Petition (must be signed by the merchant),

2. Company name certified by a notary public (contains theinformation of home address, business address, business subject,commencement date of operation, nationality, company nameand the 3 specimen signatures of the merchant under the companyname),

3. A copy of the passport (translated and certified by notarypublic),

4. Chamber Registration Statement (must bear the photo of themerchant),

5. Letter of Commitment (signed by the merchant),

For foreign nationals residing and working in Turkey, notarisedresidence and work permit must be submitted.

2. DOCUMENTS REQUIRED FORFORMING COMMERCIAL PARTNERSHIPS

A JOINT STOCK AND LIMITED COMPANIES

1. Petition (The Tax Office registered must be indicated, signedby person authorised or by proxy, and the original or notarisedcopy of the power of attorney must be attached).

2. Establishment Statement (the related gaps must befilled in and signed by an authorised person) – (5 copies).

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3. Notary public certified Articles of Incorporation (3 copies).

In case the foreign national partner is a natural person thedocuments required are:

Two copies of the passport (translated and certified by notarypublic),

In case the foreign national partner is a legal entity thedocuments required are:

l The foreign investor should have Activity Certificate of his orher company prepared by the relevant authority in the investor’scountry. This certificate should contain the information about thecurrent active status of the company and its signature executives.

l Power of Attorney should show the authority or the naturalperson who will run the establishment procedure in Turkey onbehalf of the company in origin. This attorney should mentioncompany title which will be either established or participated inTurkey and the name of authorised person for presentation.

l The above mentioned certificates (Activity Certificate,Power of Attorney) should be undersigned either by Apostleor Turkish Consulates in Foreign investors’ country.

l The approved certificates should be notarised and translatedinto Turkish before their delivery to Trade Registry Office.

4. Signature Declarations of the authorised persons under thecompany name (2 copies),

5. Original of Bank receipt (receipt from Ziraat Bank Bilkent PlazaBranch indicating that the 4/10000 of the capital is deposited tothe Arbitration Court, or the EFT receipt signed andstamped “collected” (Account No: 5383761-5016),

6. Chamber Registration Statement (must bearthe photos of natural partners),

7. Letter of Commitment (must be signed byauthorised persons).

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For the foreign nationals residing in Turkey, notarisedResidence Permit must be submitted.

DOCUMENTS REQUIRED FOR ESTABLISHING JOINTSTOCK COMPANY SUBJECT TO THE PERMISSION OFMINISTRY OF TRADE AND INDUSTRY

In addition to the above described procedure Notary Public certifiedArticles Incorporation should also get the approval of Ministry ofTrade and Industry Domestic Trade Department.

COLLECTIVE COMPANY

1. Petition (The Tax Office registered to must be indicated, andsigned by person authorised or by proxy, and the original ornotarised copy of the power of attorney must be attached).

2. Establishment statement (the related places must be filled andsigned by the authorised person) - (5 copies).

3. Articles of Incorporation signed by all partners and certifiedby a notary public (3 copies).

4. Declaration of the company officials’ signatures put under thecompany name (2 copies).

5. Two copies of the passport (translated and certified by notarypublic).

6. Chamber Registration Statement (must bear photos of naturalpartners).


For the foreign nationals residingin Turkey, notarised residence permit

must be submitted.

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COMMANDITE COMPANY

Documents required for establishing a collective company arealso required for commandite partnership company.

In case the limited partner (Commanditer) is a legal entity;

l The foreign investor should have Activity Certificate of his orher company prepared by the relevant authority in the investor’scountry. This certificate should contain the information about thecurrent active status of the company and its signature executives.


l The above mentioned certificates (Activity Certificate, Powerof Attorney) should be undersigned either by Apostle orTurkish Consulates in Foreign investors’ country.


3. DOCUMENTS REQUIRED WHENESTABLISHING A COOPERATIVE

1. Petition (signed by an authorised person).

2. Articles of Incorporation approved by the Ministry Concerned(2 copies) and its notarised summary (2 Copies).

3. Letter of Permission by the Ministry.

4. Signature Declaration of the board membersof the co-operative under the name ofCo-operative (1 copy).


6. Chamber Registration Statement (with photosof the partners).

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l The Executive board members of the cooperative shall beTurkish citizens according to the article No. 56 of the Law forCo-operatives,

For the foreign nationals residing in Turkey, notarised theresidence permit must be submitted.

PARTICIPATION TO A PREVIOUSLYESTABLISHED COMPANY

Participation to a previously established company in Turkey canbe done in two ways through either share transfer or contributionto the companies’ capital increase .According to the current Turkish Trade Code, share transfers ofJoint Stock Companies are not subject to registration by TradeRegistry Offices.

DOCUMENTS REQUIRED FOR PARTICIPATIONTHROUGH SHARE TRANSFER

1. Petition (must be signed by an authorised person under thecompany Seal, if signed by proxy then the original or the notarisedcopy of the power of attorney must be attached).

2. Notarised Board of Partners Decision in limited companies(the address and nationalities of the partners must be shown withShare Transfer Agreement certified by notary public (2 Copies).

3. Notarised Draft contract about the amendments related toshare transfer in the Articles of Incorporation for the Collectiveand Commandit partnership (2 copies).


l Two copies of the passport (translated and certified by notarypublic),

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l The foreign investor should have Activity Certificate of hisor her company prepared by the relevant authority in the investor’scountry. This certificate should contain the information aboutthe current active status of the company and its signature executives.


l The above mentioned certificates (Activity Certificate, Powerof Attorney) should be undersigned either by Apostle or TurkishConsulates in Foreign investors’ country.


For the foreign nationals residing in Turkey, notarisedresidence permit must be submitted.

DOCUMENTS REQUIRED FOR THE PARTICIPATIONSTHROUGH COMPANIES’ CAPITAL INCREASE

1. Petition (must be signed by an authorised person under thecompany seal, if signed by proxy then the original or the notarisedcopy of the power of attorney must be attached).

2. For Collective and Commandit companies; notarised DraftAmendment Contract related to capital increase signatures(2 copies).

l For limited companies the shareholdersdecision certified by notary public which containsthe new form of the amended article of the Articlesof Incorporation (2 copies), Certified report of theexisting status of previously paid capital.

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l For joint stock companies Minutes of General Assembly withits necessary attachments (2 copies), Draft Amendment(2 copies), list of Shares showing subscribed capital of eachshareholder within the increased capital, certified report of theexisting status of previously paid capital,

Furthermore, the original Permission Letter for joint stockcompanies subject to permission of Trade and Industry Ministry

3. Original of Bank Receipt (receipt from Ziraat Bank BilkentPlaza Branch indicating that the 4/10000 of the balance capital isdeposited to the Arbitration Court, or the EFT receipt signed andstamped “collected” (Account No: 5383761-5016).


Two notarised translation of passport copy,


The foreign investor should have Activity Certificate of his or hercompany prepared by the relevant authority in the investor’scountry. This certificate should contain the information about thecurrent active status of the company and its signature executives.

l Power of Attorney should show the authority or the naturalperson who will run the participation procedure in Turkey onbehalf of the company in origin. This Attorney should mentioncompany title which will be either established or participated inTurkey and the name of authorised person for presentation.

l The above mentioned certificates (Activity Certificate,Power of Attorney) should be undersigned either by Apostle orTurkish Consulates in Foreign investors’ country.


For the foreign nationals residing in Turkey, notarisedresidence permit must be submitted.

For further information, please check our web site at www.ito.org.tr

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CONTACT DETAILS OF ISTANBUL TRADEREGISTRY OFFICE

HEAD OFFICE:Istanbul Trade Registry OfficeIstanbul Chamber of CommerceAddress : Refladiye Cad. 34112

Eminönü, Istanbul / TURKEYPhone : 90 212 455 63 02-03Fax : 90 212 511 84 37E-mail : [email protected] : www.ito.org.tr

BRANCH DETAILSPerpa BranchAddress : Perpa Ticaret Merkezi B.Blok Kat.2

No.79 Okmeydan›, Istanbul / TURKEYPhone : 90 212 210 17 90 (4 lines)Fax : 90 212 210 17 94

‹stoç BranchAddress : ‹stoç Toptanc›lar Çarfl›s› 8.Blok

No.85/91 Mahmutbey,Ba¤c›lar - ‹stanbul / TURKEY

Phone : 90 212 659 69 50 (5 lines)Fax : 90 212 659 46 83

Kad›köy BranchAddress : Hasanpafla E¤itim Mah. Poyraz Sk.

Erdemler ‹fl Merkezi A Blok No.9Kad›köy, ‹stanbul / TURKEY

Phone : 90 216 449 28 52-5390 216 418 60 95-97-98

Fax : 90 216 418 60 96

Istanbul, enjoying all the advantages of its position as a bridgebetween two continents, seas and the cultural heritageaccumulated in its long history, remained for over a thousandyears one of the most important centers of the world trade.

Istanbul, the world city, can be best served by Institutionsoperating at world standards. Founded in 1882, IstanbulChamber of Commerce is an excellent example of suchinstitutions with its pioneering functions, its advanced network,expertise and knowledge as well as its modern, dynamic andproductive structure. This publication is mainly focused on therecent adjustments in Foreign Investment Legislation, in parallelwith these changes, it is giving information about the procedurein foreign capital company set ups and share transfers withthe required documents. It is intended to be a useful manualfor foreigners, seeking for a practical information.

ISTANBULThe City

Where theContinents,

Seas,Roads,

MerchantsMeet

TH

EIS

TAN

BUL CHAMBER OF COMM

ER

CE

1882