Over the past couple of days, we’ve been asked why Turkey? Why did we come here and work hard for our startup to succeed in this country? We have previously touched on the other countries and how they invest in this country and have briefly touched on why Turkey is a good country when looking for growth. However, this article won’t be answering specifically the first two questions but rather focusing on the points of whether it is easy or not to establish a company and most importantly what the actual benefits for you are.
- Prior To Investments and Company Establishment in Turkey
- Establishing a Company in Turkey
- Company Types under TCC and Alternative Forms
- Establishing a company in Turkey
- Submit Memorandum and articles via MERSIS
- Notarize Documents
- Obtaining Tax Identity Number
- Deposit a % of capital to the Competition Authority
- Deposit 25% of the startup capital in the bank and get the proof of the deposit
- Apply for a registration at the trade registry directorate
- Certify Legal Books in Turkey
- Follow up with the Tax Office on the Trade Registry’s Directorates company establishment notification
- Issuance of Signature Circular
- Utilise online systems such as E-Tuys System
Prior To Investments and Company Establishment in Turkey
In order to make an investment in Turkey, it’s crucial to gather significant amounts of information, speak to many different parties (potential customers, suppliers, etc.), as well as quickly organize communication and promotion strategies. A liaison office, which enables you to do business in Turkey without engaging in any commercial transactions, can be set up with relative ease, is not taxed, and is subject to certain restrictions regarding the ambassador’s activities. However, the activities performed by the liaison office in Turkey should not commit the company outside of its permitted scope of activities (i.e. market research, promotion of the parent company’s products and services).
Establishing a Company in Turkey
The conditions for establishing a company and transfer of deeds are interpreted as those that apply to entrepreneurs in Turkey. International investors may set up any size of company based in the the Turkish Commercial Code (TCC) provides the institutional framework for corporate governance that meets international standards, fosters private equity funding and initial public offering activities, creates transparency in managing operations and engages Turkey in the framework of the EU accession process and the European Union.
Turkey has taken the initiative with the intent of making it easier for business registration, streamlining its process, and lowering fees, for example, by introducing a first-of-its-kind service to streamline the legal entity registration process. In order to accomplish this goal, starting a company is now only carried out at Trade Registry Directorates located in the Chamber of Commerce and intended to be a one-stop shop. This process is completed within the same day.
Company Types under TCC and Alternative Forms
There are many different company types and non-corporate types under the TCC. The TCC recognizes the capability for companies to be established under these company types.
a. Corporate forms
- Joint Stock Company (JSC)
- Limited Liability Company (LLC)
Although the identification and capital requirements for a JSC and LLC may vary, the steps for establishing either will usually stay the same.
b. Non-corporate forms
- General Partnership
- Limited Partnership
- Partnership Limited by Shares
Companies may be classified in accordance with these five different types, but on one hand, they’re predominant in the global community and in the nation of Turkey.
Establishing a company in Turkey
Since we addressed the main points of why you would want to establish a company here and what you need to do prior to taking this important step, the type of structure and forms and most importantly what type of laws that are governing, it is important to focus on what exactly is needed to do this:
Submit Memorandum and articles via MERSIS
MERSIS is a central foundation for maintaining and supporting commercial registry processes and registering commercial registry data electronically on a daily basis. A unique number is assigned to law-related entities that are actively engaged in business.
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 or a Notary Public (four copies, one original)
- In case the foreign partner is a real person, the required documents are:
- 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.)
- In case the foreign partner is a legal entity, the required documents are:
- 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.
Obtaining 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.
Deposit a % of capital to the Competition Authority
0.04 percent of the company’s capital must be paid to the account of the Competition Authority via the Trade Registry Directorate pay office.
Deposit 25% of the startup capital in the bank and get the proof of the deposit
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.
Apply for a registration at the trade registry directorate
The founders may apply for registration after gathering the following documents:
- Petition requesting registration
- Four copies of the incorporation notification form
- Articles of incorporation signed by all the founders before Trade Registry Directorate’s authorized personnel or a Notary Public (four copies, one original)
- 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 acknowledgement 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.
Certify Legal Books in Turkey
The Trade Registry Directorate’s authorized personnel will certify the following books during the establishment process.
- Inventory book
- Share ledger
- Manager’s meeting minutes book
- General assembly meeting minutes book
Follow up with the Tax Office on the Trade Registry’s Directorates 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.
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.
Utilise online systems such as 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.
What do we think about it?
If you have read this far, it means that you are looking for our opinion. Although this is an extensive list that was put together by the government agency under FDI that is responsible for attracting investments, our initial conversations with the foreigners that have set up companies here have shown that the process is way quicker and easier. We will be following up on this article with the interview from the process that the people have actually gone through and what they’ve done.