Turkey: Establishing Joint Ventures In Turkey

Last Updated: 30 May 2008
Article by Bener Law Office

The considerable increase of foreign investors into the market, particularly in the form of joint ventures has played a significant role in the reform and liberalization of the laws governing foreign investors as part of Turkey's economic program adopted after 2001. These reforms have been significant in Turkey's pursuit for EU accession. Today, Turkey boasts the 17th largest economy in the world attributable to its commitment to sustain a strong economic framework to foster an environment enabling businesses to prosper. Alongside other factors, its outward-oriented economic development strategy has spurred Turkey to adopt investment incentives that have certainly been a contributing factor to the increase of investment. This has also expedited the process in which foreign investors are able to establish joint ventures in Turkey.

Reasons for establishing a Joint Venture in Turkey

Aside from its ability to maintain a stable intra/extra-economic market, Turkey is the 13th most attractive country for foreign direct investors, probably due to its demographic dynamism. These are, to name a few; a populace of over 70 million of which 65% are below the age of 35 years, a large potential workforce, a sophisticated infrastructure (legal support, financial and consultancy services), an ever increasing number of professionals with purchasing power, Turkish work ethics and the local market within Turkey itself.

Another influential reason for the attraction of foreign investors into Turkey is its strategic position. Turkey lies on the borders between Europe and Asia and is used as a gateway to achieve strategic goals to enter into the Asian or European market. This will be of particular importance for those wanting to access new markets in EU member states as Turkey signed the European Customs Union (ECU), which has been effective since 31st December 1995. The ECU involves preferential trading agreements between EU member countries where goods and services imported are exempt from any duties, and a common export tariff. A by-product of such membership has meant Turkey has had to harmonize its intellectual and industry property rights and to adopt standardization, quality and accreditation controls. This has had an incremental impact on the overall trade environment and the international standard a foreign investor would expect to operate in.

To exemplify, one of the main concerns among foreign investor's venturing with domestic companies is that of transparency. Being able to obtain accurate data on which to base valuations and other decisions may be of concern for the foreign investor as the accounting standards of the domestic partner may be vary to that used in international standards. Turkey has alleviated this problem by establishing the Turkish Accounting Standards Board, having its own legal status and administrative and financial autonomy, established by Law No: 4487, which regulates accounting and financial reporting. The Turkish Accounting Standards Board decided to adopt and be in full compliance with the International Financial Reporting Standards (IFRS) to allow integration of international accounting practices, and to be in harmony with the EU legislations and standards.

The Turkish Accounting Standards Board requires that all enterprises established under the Turkish Commercial Code in Turkey must prepare statutory financial statements in compliance with the Turkish Accounting Standards Board. The implication of this for foreign investors is that the valuations of local enterprises will be valued on the same principles adopted by international standards. This makes all accounting data transparent and more reliable for all parties involved.

Further efforts to modernize the legal infrastructure of Turkish law can be illustrated in the recent proposal to modernise the Turkish Commercial Code which is in the pipeline, envisaged to be effective some time this year. The main reasoning behind the revision of the Commercial Code was to modernize it in line with the EU harmonization attempts.

Turkey has an impressive track-record of some of the most successful joint ventures established with foreign companies and illustrates the reasons as to why Turkey is becoming an increasingly popular contender for foreign investors as an attractive place to invest in. A few examples of successful joint ventures, in the form of partnerships and consortiums that have taken place to date are provided below:



October 2000


Toyota, a Japanese company, one of the world's largest automobile manufacturer's, made a strategic joint venture with Sabancı Holding, a Turkish to form the ToyotaSA. ToyotaSA is the distributor of Toyota branded automotive products in Turkey and conducts its marketing, sales, and after-service of locally produced Corolla products.


The joint venture was established as part of Toyota's objectives for expansion and increasing sales volume in Europe, their goal to hold 15% of the global automobile market and to be in the world's top 3 automobile producers.


The establishment of ToyotaSA enabled Toyota entry into the European market and the Turkish automotive factory has been the leading supplier of Corolla Verso's into Europe. New markets include Germany, Italy, France and the UK.

The Corolla plant in Turkey is one of the world's best state-of-the-art automotive plants and runs at 100% capacity.

The branch employs more than half a million people.

The Turkish factory alone has produced over €2.2 billion worth of automobiles

The venture enabled an 8% holding of the automobile market share and announced its 11th consecutive year of sales in Europe, with the Toyota Carolla Sedan, produced in Turkey, being the 3rd best-seller in Europe.

Borusan Mannessman Boru


Year 2004


A joint venture was established between Borusan, a Turkish steel company and Mannessman Boru, a German company, namely, Borusan Mannessman Boru which welds steel pipes and profiles as well as plastic pipes.


Annual manufacturing capacity rose to 70 thousand tons upon realization of the merger.

They achieved USD 520 million in 2006 and now stand as one of the top five steel pipe producers in Europe.

Koç-Shell: Tüpraş


January 2006


Koç, one of Turkey's largest holding companies and Shell, a worldwide group of oil, gas and petrochemical companies, established a consortium and won the tender for the privatization for a 51% stake in Tupras (Turkiye Petrol Rafinerileri), an oil refinery company and Turkey's largest industrial enterprise, for USD 4.14 billion. Operations are undertaken under the joint stock company name; Enerji Yatırımları A.Ş.


To strengthen its superior position in the oil refinery market.


They have now reached coverage throughout Turkey including areas far from the location of the Tüpras refineries, and currently control all of Turkey's refining capacity.

Samsonite & Desa


October 2007


Samsonite Group, the world leader in travel bags, luggage and accessories and Desa, the leading manufacturer in the production, distribution and retail of luxury leather goods and travel goods in Turkey. Samsonite acquired a majority stake of the strategic partnership.


Samsonite wanted to expand into Eastern Europe and strengthen its market presence in Turkey, Georgia, Azerbaijan, Armenia and Syria.

Legal Aspects of Joint Ventures in Turkey

Although there is no specific legal definition of a joint venture under Turkish commercial law, the very general understanding that can be derived from common commercial practice under the scope of Company Law and Obligation Law, is that a joint venture is the engagement of two or more individuals or legal entities pooling together their resources for the purpose of executing a particular commercial undertaking.

Under the Foreign Direct Investment Law, Law No: 4875 ("new FDI Law"), dated17th June 2003, the burden for foreign investors with foreign capital to acquire certain permits in order to establish or participate with a company established under Turkish Law has been removed. To this extent, all transactions for establishing a JV by foreign investors impose the same procedure as that of domestically owned companies established under the Turkish code of Obligations. The rationale behind the new FDI Law was to establish an equal and non-discriminatory avenue in advocating local and foreign relationships by removing the initial screening process, share transfer and minimum capital requirements.

Vehicles for Establishing the JV in Turkey

Joint ventures are relatively easy to establish in Turkey thanks to the introduction of the new FDI Law in 2003. Once all the requisite documentations have been prepared and furnished to the relevant authorities, official establishment of the joint venture takes approximately 1-3 days.

There are several ways in which joint ventures can be formed in Turkey. The structure in which the joint venture is to be established is significant to the operation of the venture and must therefore be chosen carefully..

Under Turkish Law, a joint venture may be formed under two 'umbrellas';

  • a Commercial Company (ticaret şirketi), governed by the Turkish Commercial Code or

  • an Ordinary Company (adi şirket), governed by the Turkish Code of Obligations.

Commercial Company

A Commercial Company is registered and recognized as having a legal identity separate from its shareholders. According to the Turkish Commercial Code, the commercial enterprise JV may be established under five titles; an unlimited partnership (general partnerships), limited partnerships (special partnerships), companies limited by shares (stock corporations), limited liability companies (corporations without shares) and cooperative companies (cooperative societies).

The most common types of Commercial Companies in Turkey established by foreign investors are Joint Stock companies (Anonim Şirket), Limited Liability companies (Ltd.Sti.), Branch offices and Liaison offices. Limited liability companies would seem more suitable and probably more attractive for companies that require a simple shareholding structure and management i.e. between family members. For example, a limited liability requires an initial capital of TRY 5,000 and 2 shareholders at a limit of 50 shareholders, whereas a joint stock requires an initial capital requirement of TRY 50,000 and 5 shareholders. This aside, a joint stock is the preferable route for a JV as opposed to limited liability as it allows for a more complex structure and is especially more flexible for transfers of shares due to its more flexible nature.

Ordinary Company

The other form of joint venture, which is an Ordinary Company governed by the Turkish Code of Obligations, is not recognised as having a legal identity. In most cases, a contract will bind the understanding between the parties but where no contract or agreement is assigned, the venture will be governed solely by the provisions governing Ordinary Companies under the Turkish Code of Obligations or Commercial Code. The two types of Ordinary Companies are normal ordinary partnerships and consortiums. Normal ordinary partnerships and consortiums are used as a vehicle for foreigners who want to partner with Turkish entities or participate in a tender and are ideal for achieving relatively short-term specific objectives e.g. construction of a bridge.

These types of Ordinary Company may be established in two forms;

Normal Ordinary Partnership


  • All parties to the company are jointly responsible for the success or failure of the project.


  • Consortium is distinguished from the normal ordinary partnership because each party may be liable only for their contribution to the project conditional on the consent of the creditor.

  • However, the parties' separate liability is exclusively applicable to liabilities owed to the creditors. All other liabilities owed to any other parties shall be shared jointly.

Once the necessary procedure has been administered, the joint venture is officially established and the project or undertakings may commence. The next step will be to inform the General Directorate of Foreign Investment of the establishment of the joint venture (this is merely a formal procedure for records). However, when establishing a joint venture, it is imperative that the parties involved must observe the Turkish competition law regulations as to its applicability to them.

Competition Law

Joint ventures are wide in their spectrum of their cost-benefit ratio. The cost being their potential negative influence on the market they operate in and the benefit being their potential pro-competition effect. For this reason, joint ventures warrant assessment in terms of their competitive effect. Turkey's competition laws are parallel to the European Union Council Regulation on competition.

The Turkish competition law and regulations have a monetary and capacity threshold for joint ventures, its purpose being to safeguard competition in the respective market. These laws and regulations provide that permission from the Turkish Competition Board does not need to be sought as long as; the combined contributions of the parties do not exceed TRY 25 million nor will the joint venture result in it occupying 25% or more of the relevant Turkish market it will enter into. However, if it does exceed these thresholds, then the joint venture must apply to the Competition Board where they may allow the joint venture under a two phase application, namely, "exemption" and "negative clearance".

An exemption sets out certain sector-specific criteria's which may exempt the applicant joint venture to be established. If the applicant joint venture does not fall under "exemption", then an application for "negative clearance" would be sought. However, the likelihood of reaching this stage is very small and only becomes necessary in very exceptional cases. In a case of negative clearance, the merits or eligibility for qualification of the joint venture is highly case-specific and is generally based on the requirement, amongst others, that although the applicant joint venture is above the threshold, its presence will not affect the dynamics of the respective market. If the Competition Board authorizes the joint venture, then the company may officially proceed with its intended undertakings.

Reasons for the Success of Joint Ventures in Turkey

In principle, when examining the pro's and con's of a joint venture, joint ventures seem destined for success. However, in practice, there is no concrete rule that assumes all joint ventures to be successful. Aside from the financial and corporate strategic aims of the parties involved, success of a joint venture is highly dependant on the relationship between the involved parties prior and subsequent to the joint venture, not to mention their differing cultural business ethics.

Considering this, the gap between international and Turkish practice codes is narrowing rapidly. Turkey has been able to set the pace for developing countries by adopting international standards in many respects. At the rate at which globalisation is occurring, it is vital that all countries position themselves to be more accessible and to welcome investments in order to receive the benefits that cross-border transactions may yield. This firstly requires establishing an environment in which businesses are firstly attracted to enter into, and then striving to maintain a healthy business environment where those businesses may operate successfully in. Turkey has not only recognised this concept but has also taken the steps to realize it.

Turkey is continually undergoing legal and regulatory reforms and restructuring in an attempt to modernize the way businesses are able to operate in as a response to businesses become increasingly complex and dynamic in order to achieve their objectives. Naturally, along with the reforms and new legislations that have been adopted in compliance with international standards, the business ethics and practices used in Turkey have also evolved to that of international standards. This, naturally, will enable common understanding between foreign and local partners which can greatly ease the strain and remove the reservations foreign investors have to partner with companies in developing countries. The favourable economic environment, Turkish business ethics and the Turkey's socio-economic qualities, combined, has probably contributed to the vast growth in the investments it has experienced over the past few years.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions