Company Establishment in Turkey

 Republic of Turkey

Ministry of Trade

3

CONTENTS

TYPES OF COMPANIES IN TURKEY......................................................................5

JOINT STOCK COMPANY........................................................................................6

LIMITED COMPANY..................................................................................................8

COLLECTIVE COMPANY........................................................................................10

LIMITED PARTNERSHIP.........................................................................................10

COOPERATIVE.........................................................................................11

COMPANY ESTABLISHING TRANSACTIONS IN TURKEY............................12

STEPS OF ESTABLISHMENT..................................................................................13

DOCUMENTS TO BE SUBMITTED TO THE TRADE REGISTRY DIRECTORATE

FOR ESTABLISHMENT............................................................................................15

Documents Required for Registration of Joint Stock Company..............................15

Documents Required for Registration of Limited Company.......................................16

Documents Required for Registration of Cooperative.................................................17

Documents Required for Registration of Collective Company and Limited Partnership.17

AUDIT IN TRADE COMPANIES...............................................................................18

SHARE TRANSFER IN CAPITAL COMPANIES...................................................19

LIQUIDATION.......................................................................................................20

BRANCHES OF FOREIGN COMPANIES..............................................................22

TRANSFER OF HEADQUARTERS..........................................................................24

Moving the headquarters of a company in Turkey to abroad....................................24

Moving the headquarters of a foreign company to Turkey.......................................25

5

TYPES OF COMPANIES IN TURKEY

According to the Turkish Commercial Code there are five different types of companies in Turkey.

These are;

Joint stock company, limited company and limited partnership divided into shares are the capital

companies. In capital companies, the partners are only liable to the company with the capital they

have committed.

Ordinary limited partnership and collective companies are private companies. In private

companies, the principle of the second and unlimited liability of the partners for the debts of the

company is valid.

The establishment, basic characteristics and operation of these companies are regulated in the

Turkish Commercial Code No. 6102. About the cooperatives, Cooperatives Law No. 1163 is applied

primarily.

Joint stock companies and limited companies are the most common type of companies in

Turkey. Approximately 82% of all companies are limited companies, while 13% are joint stock

companies and 4% are cooperatives. The total of collective and limited partnership companies is

around 1%.

Joint Stock

company

Limited

company

Collective

Company

Limited

Partnership

Cooperative

1 2 3 4 5

Ordinary Limited

Partnership

Limited partnership

divided into shares

Limited

Company

Joint Stock

Company

Collective Company and Cooperative

Limited Partnership

6

A joint stock company is a company

whose capital is definite and divided

into shares and which is responsible for

its debts only with its property holdings.

Joint stock companies may be

established for any economic purpose

and subject that is not prohibited by law.

As a rule, approval of the general

assembly is not required for the

transfer of shares. Shareholders may

freely transfer their shares to others.

Joint stock companies may issue

registered and bearer shares in order

to represent the shares. They may

also issue bonds and similar debt

instruments.

A joint stock company with a single

share can be established. Real and legal

persons may be shareholders.

Shareholders are only liable to the

company with the capital shares they

have committed.

Joint stock company has a articles of

association written and registered to

the trade registry at the place where

its headquarters is.

Joint stock companies are the only type

of company whose shares are offered

to public and whose shares are traded

on the stock exchange.

Joint stock companies carrying out

certain activity areas and joint stock

companies exceeding the threshold

values of the criteria determined

according to total assets, annual net

sales revenue, number of employees

are subject to independent audit.

The minimum capital amount is

50,000 Turkish Liras. (For non-public

Joint stock companies accepting the

registered capital system , the initial

capital may be at least 100,000

Turkish Liras.) At least one quarter

of the nominal value of the shares

committed in cash must be paid

before registration. The remaining

amount shall be paid within 24 months

following the registration of the

company. The payment schedule may

be set out in the articles of association

of the company or may also be

determined by the board of directors.

JOINT STOCK COMPANY

1 The registered capital system is a system that allows the board of directors to increase capital with the authority granted by the general assembly by

limiting it to a certain amount and time.

7

Joint stock company has two organs

As a rule, it is the organ in which all

shareholders are represented and

exclusively authorized to take some

important decisions concerning the

company (e.g. amendment of the articles

of association, election of the board

of directors, election of the auditor,

termination of the company, etc.).

It is the organ that is mainly responsible

for the management and representation

of the company. It is possible that the

board of directors consists of one

member. There is no requirement for

board members to be a Turkish Citizen

and to be resident in Turkey.

GENERAL ASSEMBLY BOARD OF DIRECTORS

Establishment and amendments to the articles of association

of certain joint stock companies are subject to the permission

of the Ministry of Trade

Various equivalents of joint stock company in the world

Banks, financial leasing companies, factoring companies, consumer finance and card services

companies, asset management companies, insurance companies, holding companies established as

joint stock companies, companies operating foreign exchange buffets, companies engaged in public

retailing, agricultural products licensed warehousing companies, product specialized stock exchange

companies, independent auditing companies, observing companies, technology development zone

management companies, companies subject to the Capital Markets Law No. 6362, founder and

operator companies of the free zone.

United States of America, Canada Corporation (Inc., Corp.)

Societas Europaea (SE)

Aktiengesellschaft (AG)

Societé Anonyme (SA)

Public Limited Company (plc)

Società per Azioni (SpA)

Sociedad Anónima (S.A.)

European Union

Germany, Austria, Switzerland (German-speaking cantons)

France, Belgium, Switzerland (French-speaking cantons)

United Kingdom

Italy

Spain, Mexico, Argentina

8

A limited company is a company

whose capital is definite and divided

into shares and is responsible for its

debts only with its property holdings.

A limited company with a single

shareholder can be established. The

number of shareholders may not

exceed fifty. Partners of a limited

company may be real or legal persons.

In limited companies, bearer shares can

not be issued.

The transfer of limited company shares

is subject to the approval of the general

assembly.

The limited company has a company

contract written and registered to the

trade registry at the place where its

headquarters is.

Limited companies cannot be offered

to public.

The shareholders are not liable for

the debts of the company, they

are obliged to pay only the capital

shares they have committed and to

fulfill the additional payment and

performance obligations stipulated in

the company contract. Shareholders

are responsible for capital debts due

to uncollectible public debts in the

rate of their capital shares.

The capital of the limited company is at

least 10,000 Turkish Liras. It is possible

to pay all of the capital brought in cash

within 24 months after the registration

of the company. Payment schedule

can be arranged in the company

contract or may be determined by the

directors.

LIMITED COMPANY

9

Limited Companies have two organs

As a rule, it is the organ exclusively

authorized to take some important

decisions about the company (eg

changing the company contract,

selecting the directors, selecting the

auditor, termination of the company,

etc.) where all shareholders are

represented.

It is the organ mainly responsible for

the management and representation

of the company. It is possible that the

company has only one director. At least

one of the directors must be a partner of

the company. There is no requirement

for directors to be a Turkish Citizen and

to be resident in Turkey.

GENERAL ASSEMBLY DIRECTOR / BOARD OF DIRECTORS

Various equivalents of limited company in the world

United States of America Limited Liability Company (LLC)

Societas Privata Europaea (SPE)

Gesellschaft mit beschränkter Haftung (GmbH)

Private Limited Company (Ltd, Limited)

Societé à Responsabilité Limiteé (SARL, SàRL)

Società a Responsabilità Limitata (Srl)

Sociedad Limitada (S.L.)

Sociedad de Responsabilidad Limitada (S.R.L., S. de R.L.)

European Union

Germany, Austria, Switzerland (German-speaking cantons)

France, Belgium, Switzerland (French-speaking cantons)

United Kingdom

Italy

Spain

Mexico, Argentina

10

Only real persons may be partners in

the collective company.

There are two kinds of limited

partnership company; ordinary limited

partnership and limited partnership

divided into shares

The most important feature of the

limited partnership is that it has limited

and unlimited responsible partners

together. Some partners are limited

responsible, and some partners are

unlimited responsible.

The responsibility of the active partner

is like a collective company partner.

Creditors who cannot cover their

receivables from the assets of the

company may apply to the active

partners. Active partners manage the

company.

The collective company is established

with at least two partners.

The ordinary limited partnership is

a private company, and the limited

partnership divided into shares is a

capital company

A limited parnership can be established

by at least two people, one of which is

active partner (unlimited responsible)

and the other one is dormant partner

(limited responsible). The active

partners can only be real persons. The

dormant partners can be both real and

legal persons.

The responsibility of the dormant

partners is limited by the amount

of capital that they put or commit.

Dormant partners cannot manage the

company.

Each partner has the right and duty

to manage the company separately.

However, management business may

be assigned to one, several or all of the

partners, either by company agreement

or by the majority of partners.

The partners of the company are

second degree unlimited liable to the

creditors of the company.

There is no capital requirement for

collective companies.

COLLECTIVE COMPANY

LIMITED PARTNERSHIP

11

A cooperative company is not a private

company or a capital company, but a

commerce company like any other

mentioned companies.

Cooperatives are partnerships with

varying partnerships established by real

and legal persons in order to provide

and protect the specific economic

interests of partners and especially

their needs related to their profession

or livelihoods by means of labor

force, mutual assistance by monetary

contributions, solidarity and bail.

Each partner undertakes at least one, at

most five thousand shares. The value of

a partnership share is 100 Turkish Liras.

Provided that the articles of association

contain provisions, it may be decided

that the partners shall be liable to

the second degree unlimited liability

against the creditors of the cooperative

or limited liability up to a certain

amount more than the capital share

they have committed.

All partners, except those who were

not partners three months before the

general assembly, may participate in

the cooperative general assembly . This

requirement is not required in building

cooperatives.

The cooperative can be established

with at least seven partners, without

prejudice to special types.

One or more auditors shall be elected

by the general assembly for at least

one year as the supervisory body of

the cooperative. Auditors are required

to carry the conditions of being a board

member.

The board of directors consists of at

least three persons who are Turkish

citizens and who meet the other

requirements depicted in the Law.

members of the board of directors

may be elected for a maximum term of

four years. Unless otherwise provided

for in the articles of association, they

may be re-elected.

COOPERATIVE

12

COMPANY ESTABLISHING TRANSACTIONS IN TURKEY

In Turkey, the company establishment procedures, if necessary documents

submitted the related trade registry offices, can be completed within one hour.

In Turkey, establisment of companies is exempt from duties. Establishing a

company in Turkey by foreign real and legal entities is subject to the same rules

as domestic investors.

The trade registry is recorded by 238 trade registry directorates operating

within the chambers of commerce under the supervision and audit of the

Ministry of Trade

Establishment procedures are performed electronically

on the Central Registry System (MERSİS)

13

Preparation of the company contract and approval of the

signatures of the founders

Users can start the company establishment process by

creating a free membership via MERSİS internet address

https://mersis.gtb.gov.tr/. In the preparation of the

company contract on MERSİS, Turkish citizens can be added with their ID

numbers and foreigners with their passport numbers as partner or authorized.

However, for this process, foreigners must first obtain a tax number from the

tax office and register it to MERSIS by applying to the trade registry office.

MERSIS directs the user to fill in the legally required elements

of the contract and the company contract is prepared by

entering the necessary information. The contract is prepared

in Turkish. The company’s potential tax number is also automatically assigned

by MERSIS. The founders then sign the contract and it is verified by a competent

authority, whether the signatures actually belong them or not. For this process,

the founders or their authorized representatives are required to go to the

relevant organization. In limited companies and cooperatives, this process is

carried out at the trade registry directorate where the company headquarters

is located. For other companies, it is possible to apply to the trade registry

directorate where the company headquarters is located or any notary public. In

case the approval process is requested to be made at a notary public, users can

apply to any notary public with the tracking number obtained from MERSİS.

Since the contract is transmitted to the notary public by MERSİS electronically,

there is no need to go to the notary public with physical print out.

STEPS OF ESTABLISHMENT

s ö z l e s m e

14

Preparation of signature declarations of company officials

Payment of Competition Authority Share and Cash Capital

Application to the Trade Registry Directorate for registration

The signatures of the persons authorized to represent the

company under the title of the company shall be approved

by the competent authority and signature declarations shall

be prepared. This process is carried out in any trade registry offices in Turkey.

Upon the application of the founders together with the

relevant documents to the registry directorate, the trade

registry directorate completes the registration process.

In addition, in the establishment of joint stock and limited companies and

the cooperatives, the commercial books to be kept by these are approved

by the trade registry directorate and given to the related party following the

registration. It is also possible to carry out the establishment transactions

through a representative authorized by a power of attorney.

t e s c I L

0.04% of the Company’s capital must be deposited in the

bank account of the Competition Authority as “Share of the

Competition Authority”. There is no need to go to the bank for

this transaction. This amount can be paid in trade registry directorate together

with other establishment transactions. In addition, at joint stock companies at

least 25% of the shares committed in cash must be deposited into a bank account

opened on behalf of the company before the registration of the company.

S Ö Z L E S M E

15

DOCUMENTS TO BE SUBMITTED TO THE TRADE

REGISTRY DIRECTORATE FOR ESTABLISHMENT

Documents Required for Registration of Joint Stock Company

The Articles of Association of which the signatures of the founders have been certified

Proof of payment indicating that the Competition Authority’s share has been paid

If any, written statements of non-shareholder board members, that they accept this duty

Signature declarations of persons authorized to represent and bind the company

Document showing that at least twenty-five percent of the capital committed in cash is

deposited in the bank

If capital other than cash is committed, letter to be taken from the relevant registry stating

that there is no restriction on the capital in kind

If capital other than cash is committed, document showing that the immovable, intellectual property

rights and other values put as capital in kind are annotated to the registries in which they are registered

If any, contracts with the company being established and with its founders and other persons about

the establishment, including those related to the takeover of non-cash assets and corporation

For companies whose establishment is subject to the approval or appropriate opinion of the

Ministry or other official institutions, the letter of this permission or appropriate opinion

In the case of a legal person in the board of directors, the name and surname of a real person

determined by the legal person on behalf of the legal person and the notarized copy of the

decision of the competent body for this determination

If any, valuation reports prepared by the court appointed expert for the determination of the

committed capital other than cash, the assets to be taken over during the establishment and

non-cash assets.

16

Documents Required for Registration of Limited Company

Company agreement with approved signatures of founders

Written statements of non-partner member of board of directors that they accept this duty

Signature declarations of company directors

Document of payment indicating that the Competition Authority’s share has been paid

In the case of a legal person in the board of directors, the name and surname of a real

person determined by the legal person on behalf of the legal person and the notarized

copy of the decision of the competent body for determination

If any, valuation reports prepared by the court appointed expert for the determination of the

committed capital other than cash, the assets to be taken over during the establishment and

non-cash assets

If capital other than cash has been committed, letter to be taken from the relevant registry

stating that there is no restriction on the capital in kind

If capital other than cash is committed, document showing that the immovable, intellectual property

rights and other values put as capital in kind are annotated to the registries in which they are registered

If any, contracts with the company being established and with its founders and other persons about

the establishment, including those related to the takeover of non-cash assets and corporation

17

Documents Required for Registration of Cooperative

Documents Required for Registration of Collective Company and

Limited Partnership

The company contract, that the signatures of the founders are approved by the trade registry

directorate

The company agreement, that the signatures of the founders approved by a notary public

Authorization letter of the authority authorizing the establishment of the cooperative

Approved copy of the signatures to be signed under the title of the company by the persons

authorized to represent and bind the company

Letter from the relevant register stating that there is no restriction on the capital other than

cash committed

Document showing that the immovable, intellectual property rights and other values put as

capital other than cash are annotated to the registries where they are registered

Signature declarations of the persons authorized to represent and bind the cooperative

under the title of cooperative

At limited partnership, if the dormant partner had committed capital other than cash,

valuation report prepared by the court appointed expert for the determination of the value

of the non-cash assets

18

AUDIT IN TRADE COMPANIES

In Turkey, capital companies operating in certain areas and capital companies providing

at least two of the threshold value in terms of “total assets”, “annual net sales revenue”

and “number of employees” are subject to independent audit. The financial statements

and board of directors’ reports of these companies are audited by independent auditors

in accordance with international auditing standards.

In addition, the Ministry of Trade has the authority to audit all the trading companies

in terms of transactions under the Turkish Commercial Code. As well, companies that

carry out certain activities (e.g. banks, insurance companies, etc.) may be audited by the

relevant public institutions and organizations in accordance with the special laws to which

they are subject. In summary, public audit of trading company in Turkey it is carried out by

public institutions and organizations.

However, in order to clarify certain events, shareholders have been given the right

to request the appointment of an auditor from the general assembly. The request of

the shareholder to appoint a special auditor is approved by the majority decision of the

general assembly. If the request is rejected at the general assembly, shareholders who

make up at least one-tenth of the capital (one-twentieth in publicly-held companies) may

request the court to appoint a special auditor within three months.

19

SHARE TRANSFER IN CAPITAL COMPANIES

Foreign investors, instead of establishing a company directly, can also invest by

acquiring shares in a company already established in Turkey. It is also possible for them to

leave the company partnership by transferring the shares they have taken over to others.

At joint stock companies, registered shares and bearer shares can be printed. The

transfer of bearer shares is carried out with the transfer of possession. The transfer of

registered shares is carried out with the transfer of turnover and possession. Except in

exceptional circumstances, it is not possible to limit the transfer of shares in joint stock

companies. At the same time, share transfer in joint stock companies is not subject to

registration and announcement.

Transfer of shares in limited companies includes the processes required by law.

These are;

For the limited partnership divided into shares, the procedure of share transfer applied

in joint stock companies are valid.

Signing the share transfer agreement between the parties

and notarizing it,

Unless otherwise stipulated in the company contract, the

approval of general to the transfer of shares,

Share transfer contract, the decision of general assembly

approving the transfer and registration and announcement

of the share transfer.

1

2

3

20

LIQUIDATION

The company terminates in case the realization of any of the reasons for termination

stipulated at the law, and in line with the decision of the shareholders. The terminated

company enters the liquidation process. The issue that the company has ended and

entered into the liquidation process shall be registered and announced to the relevant

trade registry directorate.

The company in liquidation, including its relations with shareholders, maintains its

legal personality until the end of the liquidation and uses the trade title as the expression

of “in liquidation” added.

The purpose of the liquidation is to sell the assets of the company and convert them

into money, collect their receivables, pay their debts and complete their unfinished

business.

The actions to be taken during the liquidation process is carried out by the liquidation

officers. At least one of the liquidation officers must be Turkish citizen and resident in

Turkey. Liquidation officers can be appointed by company agreement or general assembly

resolution. If not appointed in this way, the liquidation is done by the board of directors.

Liquidation officers must also be registered and announced in the trade registry.

Creditors, who are determined from company books and from other documents shall

be informed by registered letter, and the other creditors shall be informed by the three

announcement to be carried out three every other week on Turkey Trade Registry Gazette

and on the company’s website and at the same time as stipulated in the Articles of

Association, that the company is ended, and creditors are called to inform the liquidation

officers about their receivables.

The liquidation officers shall prepare the financial statements regarding the liquidation

for the end of each year and present the final balance sheet to the general assembly at

the end of the liquidation.

21

After the debts of the company in liquidation have been paid and share prices have

been returned, the remaining assets are distributed among the shareholders at the rate

of the paid-in capital and privilege rights, unless otherwise agreed in the articles of

association. In case of concession in the liquidation share, the regulation in the articles of

association shall be applied.

The remaining assets shall not be distributed unless six months have passed since the

date of the third announcement to the creditors.

Upon the end of the liquidation, the liquidation officers apply to the trade registry

directorate to delete the trade name of the company from the register. Deletion is

registered and announced upon request. The legal entity of the company end by deletion.

On the other hand; in case of bankruptcy, the liquidation shall be carried out by the

bankruptcy administration in accordance with the provisions of the Enforcement and

Bankruptcy Law.

22

BRANCHES OF FOREIGN COMPANIES

For the commercial enterprises which their centers are abroad, their branches

in Turkey, without prejudice to the provisions of the laws of their own countries trade

title, are registered as domestic commercial enterprises. A full authorized commercial

representative is assigned for these branches whose residential is in Turkey. If the

commercial enterprise has more than one branch, the branches to be opened after the

registration of the first branch are registered as the branches of domestic commercial

enterprises.

For the registration of a foreign company’s branch in Turkey, the documents to be

submitted to the relevant trade registry directorates are as follows:

23

• A letter from the competent authority and its Turkish translation showing that; the

requirements of the law of the origin country, where the company headquarters

is located, that is required for the registration is fulfilled, and the documents to

be submitted for the registration of the branch

• All documents required for the registration of the branch in the origin country

• A certified copy of the documents containing the company’s current registry

records and the company contract, and one Turkish translated copy for each

• The original copy of the decision of the company’s authorized body, about

opening branch, and the appointment of full authorized Turkish resident

represantative to company, and a copy of Turkish translation

• The original decleration signed by the the company center authoritatives, and a

copy of its Turkish translation, that includes, company’s trade name, type, subject

of operation, type and amount of capital, date of establishment, registration

number, the law to which it is subject, whether it is a member of the European

Union, the website, the title of the branch and the amount of capital allocated to

the branch, name, surname, ID No, and residential of the person or persons, who

is full-authorized to represent the branch against private and public institutions

including the courts, and the address of the branch.

• If the person or persons, who is full-authorized to represent the branch against

private and public institutions including the courts in Turkey and powers conferred

on them is not specified in the branch opening decision, the original copy of the

power of attorney on this issue and a copy of its Turkish translation.

• Signature declarations of the persons who will represent the branch

• For branches that are subject to the approval or appropriate statement of the

Ministry of Trade or other official institutions, the letter of approval or appropriate

statement

24

TRANSFER OF HEADQUARTERS

It is possible to move the headquarters of a company established in Turkey to abroad

is possible. In order to do so, the decision of the competent body must be taken and

the necessary documents must be submitted to the relevant trade registry directorate,

provided that the quorums specified in the Law are complied with. Upon the completion

of these transactions, the records of the company shall be deleted by the directorate and

the following documents shall be registered: decision of the authorized organ for moving

the center abroad, trade title of corporation name, if any, after the headquarter of trade

company is moved to the abroad, legal form, headquarters, and documents proving that

measures have been taken to protect the creditors with the foreign authority authorized

to register.

The documents required to be submitted to the directorate where the headquarters

is registered in order to move the headquarters of the trading company abroad are as

follows:

MOVING THE HEADQUARTERS OF A COMPANY

IN TURKEY TO ABROAD

Newspapers and documents proving that creditors are notified of the change in

the position of the company as provided for in the company contract and in any

case by means of announcement in the registry gazette and that they are invited

to declare their receivables

Written consent of all creditors or documents confirming that all receivables are

paid or secured

Letter to be taken from the tax office and social security institution where the

company is registered, indicating that it has no debt or they are secured

Notarized copy of the decision of the competent body for moving the company’s

headquarters abroad

Document confirming the continuation of the activity of the trading company

abroad, approved by the relevant authorities and its notarized Turkish translation

25

It is possible to move the headquarters of a company established in abroad to Turkey.

In the registration of the companies, moving its headquarters to Turkey, provisions in

establishment shall be applied. Trade registry directorates; during this registration,

are responsible for investigating whether the company contract, which moves its

headquarters to Turkey, is in compliance with Turkish law or has been adapted.

If a company’s headquarters moved to Turkey firstly, the documents necessary for

registration of trading companies must be submitted to the directorate. In addition, the

documents that need to be submitted to the directorate by the approval of relevant

authorities are as follows:

MOVING THE HEADQUARTERS OF A FOREIGN

COMPANY TO TURKEY

The document and its Turkish translation given by trade registry of the foreign

country, if not by the competent authorities showing that, the company moving

its headquarters to Turkey exists in accordance with foreign country’s legislation

The document obtained from the competent authority abroad and the its Turkish

translation regarding the change of the headquarters is in accordance with its

own law

For the company which headquarters is moved, the company contract that is

adopted to Turkish law, and its Turkish translation.

If the registration of the company that moves its headquarters is subject to

permission, the permission letter obtained from the related institution

TÜRKIYE CUMHURIYETI

TICARET BAKANLIGI

Directorate General of Domestic Trade

www.icticaret.gov.tr