ESTABLISHING A COMPANY IN TURKIYE

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Popular type of business entity used by both domestic and foreign investors in Turkey is a capital company. Investors have the option of starting a new capital company or joining an existing one. It is acceptable for foreign corporations and/or individuals to own 100% of Turkish corporate entities.

According to Turkish law, joint stock corporations (also known as "Anonim Şirket" or "A.Ş.") and limited liability companies (also known as "Limited Şirket" or "LTD" in Turkey) are capital companies as opposed to so-called "personal companies" used for providing individual services. Joint-stock corporations are similar to "Corporations" in the U.S. and "Société Anonyme" in Europe.

In capital-intensive companies, the share capital subscribed in principle limits the liability of shareholders. In both A.Ş. and LTD. company types, the framework outlined in Turkish Commercial Code No. 6102 dated January 13, 2011 (the "TCC") governs the fields of activity, operations, and other corporate matters. Company articles of association (AoA) are similar to "certificates of incorporation" and "bylaws" in other jurisdictions.

Practically speaking, Joint Stock Companies (A.Ş.'s) are more developed and adaptable legal entities (the management body is the Board of Directors, the company holds General Assemblies, etc.), and A.Ş.'s could issue share certificates (physically printed) available for different financing purposes. Limited Liability Companies, on the other hand, are typically utilized for smaller-scale projects and investments (the only corporate body is the shareholders general assembly, and day-to-day businesses are run by the board of Managers).

The liability perspective is where the two company types diverge most. The shareholders of LTD are also liable with their personal assets for State-related debts such as taxes and social security premium payments for employees, despite the fact that they are both capital companies (with shareholders' obligations to pay capital payments limited). Due to the flexibility of corporate transactions and the reduced shareholder liability for corporate-related debts, foreign investors may be advised to incorporate A.Ş. companies rather than LTD. companies given that the two types of businesses are now more bureaucratically similar (subject to the new TCC in effect since 2012).

The paperwork needed to establish capital companies and/or branches or liaison offices is straightforward and mainly consists of information about the firms or people who will be the shareholders, such as activity certificates, certificates of good standing, passport information, and residency information. Please take note that foreign documents must be verified by the Turkish Consulate in the source country or by an apostille (based on the Hague Convention of October 5, 1961, Abolishing the Requirement of Legalization for Foreign Public Documents).

Following the submission of documentation for both types of capital companies (limited liability companies and joint stock companies), including tax registration and work place opening permits, the entire process for incorporation takes less than two  weeks. The company registration at the trade registry only takes one (1) to three (3) days. For branches and liaison offices, an additional two  weeks must be set aside to secure the required special permissions. Additional two (2) weeks must be set aside in the event that licenses are needed for activities in regulated sectors of the economy or for the incorporation of free trade zones. 

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