Establishing a Company in Türkiye as a Foreign Investor

Overview

Thanks to its strategic location, large domestic market and investment opportunities across various sectors, Türkiye is one of the countries considered by foreign investors. Foreign investors may acquire real estate, invest in an existing company, establish a new company or open a branch or liaison office in Türkiye.

The appropriate investment model should not be determined solely on the basis of commercial expectations. Tax obligations, regulatory approvals, shareholders’ liability, capital requirements and the investor’s long-term objectives should also be considered.

Can Foreign Investors Establish a Company in Türkiye?

Foreign individuals and legal entities may establish a company or become shareholders in an existing company in Türkiye, provided that the applicable legal requirements are fulfilled. Under the Turkish Foreign Direct Investment Law, foreign investors are, as a general rule, treated equally with domestic investors.

Many company formation procedures may be carried out through a representative in Türkiye acting under a duly issued power of attorney. However, the investor’s physical presence or additional documentation may be required for opening a bank account, fulfilling know-your-customer requirements, obtaining sector-specific licences or completing residence and work permit procedures.

Whether a company can be established without the investor travelling to Türkiye must therefore be assessed on a case-by-case basis.

Investment Options in Türkiye

Each investment model is subject to different corporate, tax and regulatory requirements. This article focuses on the two types of capital companies most frequently preferred by foreign investors in Türkiye: the joint stock company and the limited liability company. The Turkish limited liability company, known as a Limited Şirket, is broadly comparable in its basic corporate structure to a German Gesellschaft mit beschränkter Haftung (GmbH). However, the two company types are not legally identical and are governed by their respective national laws.

• Establishing a new company
• Acquiring shares in or becoming a shareholder of an existing company
• Opening a Turkish branch of a foreign company
• Establishing a liaison office
• Acquiring real estate
• Forming a joint venture or project company
• Benefiting from sector-specific investment incentives

Company Formation in Türkiye

The Turkish Commercial Code regulates collective companies, commandite companies, joint stock companies, limited liability companies and cooperatives. In practice, foreign investors most commonly prefer the joint stock company or the Limited Şirket.

Both company types may be established by a single individual or legal entity. The foreign status of a founder or shareholder does not, in itself, result in a higher minimum capital requirement. However, additional capital requirements, licences or regulatory approvals may apply depending on the company’s field of activity.

Establishing a Joint Stock Company

A Turkish joint stock company, known as an Anonim Şirket or A.Ş., is a capital company with a fixed capital divided into shares. As a general rule, the company is solely liable for its obligations with its own assets.

A joint stock company may be established by a single individual or legal entity. There is no general maximum number of shareholders. However, the number of shareholders or a public offering of shares may trigger additional obligations under Turkish capital markets legislation.

Minimum Capital of a Joint Stock Company

The statutory minimum share capital of a joint stock company is TRY 250,000. Higher capital requirements may apply to activities governed by sector-specific legislation.

At least one-quarter of the nominal value of the shares subscribed in cash must be paid before registration. The remaining amount must be paid within 24 months following the company’s registration. The articles of association may require a higher initial payment or provide for a shorter payment period.

Establishing a Limited Şirket

A Limited Şirket is a capital company that may be established by one or more individuals or legal entities. Its capital is divided into equity interests.

A Limited Şirket may have at least one and no more than 50 shareholders. It may operate in any field of activity for which the law does not expressly require the establishment of a joint stock company.

Minimum Capital of a Limited Şirket

The statutory minimum share capital of a Limited Şirket is TRY 50,000. A higher amount may be specified in the articles of association.

The cash capital subscribed by the shareholders does not have to be deposited into a bank account before the company is registered. Unless a shorter period is specified in the articles of association, the subscribed capital may be paid within 24 months following registration.

Which Company Type Should Be Chosen?

The choice between a joint stock company and a Limited Şirket should not be based solely on the minimum capital requirement. The following factors should also be considered:

A Limited Şirket may provide a simpler corporate structure for smaller businesses or companies with a limited number of shareholders. A joint stock company may be more suitable where the investment plan involves new investors, share transfers, institutional corporate governance or long-term growth objectives. The final decision should always be made according to the specific circumstances and objectives of the investment.

• The scale and field of the investment
• The number and structure of shareholders
• Plans to admit new investors or transfer shares
• Financing and capital market objectives
• The proposed management structure
• The liability of shareholders and company officers
• Tax implications
• Required licences or regulatory approvals
• The investor’s long-term exit strategy

What Does Professional Legal Advice Provide?

The initial establishment of a company and its long-term legal and corporate requirements call for different advisory arrangements. In some cases, preparing the articles of association and completing the registration process may be sufficient. In others, comprehensive advice may be required in relation to regulatory approvals, shareholders’ agreements, capital transactions, work permits, banking procedures and corporate resolutions.

Dedeoğlu Partner advises foreign investors on company formations and investment projects in Türkiye according to the requirements of each project. Its services include communication with shareholders based abroad, the preparation and collection of the necessary documents and the legal coordination of procedures before the relevant authorities.

Disclaimer

This article has been prepared for general information purposes only and does not constitute legal, tax or investment advice. As minimum capital requirements and company formation conditions may change through legislative amendments, legal and tax advice should be obtained in relation to the specific investment before proceeding.