The Ministry of Trade (formerly known as the Ministry of Economy) ("Ministry") published the Regulation Amending the Regulation on the Implementation of the Foreign Direct Investment Law ("Regulation"), in the Official Gazette on June 1, 2018. The Regulation amends the procedure for notifications to be made to the Ministry by foreign-capitalized companies and by branch offices of foreign companies ("Companies").
As of the Regulation's publication date in the Official Gazette, hard copies of the information forms related to the Companies' (i) activities, (ii) share capital increases and decreases, and (iii) share transfers (collectively "Information Forms") will no longer be sent to the General Directorate of Incentive Practices and Foreign Capital ("General Directorate"). Rather, the Companies are now required to provide such information through an online platform, namely the Electronic Incentive Practices and Foreign Capital System ("Elektronik Teşvik Uygulama ve Yabancı Sermaye Bilgi Sistemi" in Turkish, or "E-TUYS").
II. Notification Procedure: Before and Now
Before the amendment came into effect, Companies were obliged to send hard copies of the Information Forms to the Ministry. Templates of the Information Forms were provided in the annexes of the Regulation on the Implementation of the Foreign Direct Investment Law.
From June 1, 2018, the following notifications are required to be made by users appointed by the Companies through E-TUYS:
- Users must provide the required information on "Investors," "Shareholders List," and "Subsidiaries," if any, of the Companies, no later than one (1) month as of the date of their appointment.
- Users shall fill in and file the Activity Information Form for Direct Foreign Investments, which relates to information on the annual activities of the Companies, annually and until the end of May.
- In case there is a share capital increase or decrease, or if a share transfer occurs, users must update the "Shareholders List" within one (1) month as of its effective date.
- Users shall complete the Share Capital Information Form for Direct Foreign Investments within one (1) month as of the payment date relating to the share capital increase(s) or share transfer(s).
III. Implementation of E-TUYS
E-TUYS is an online platform through which Companies will provide the foregoing information to the Ministry. In order to use this system, Companies must first register as a "user" by completing and presenting the necessary authorization documents detailed in the Regulation to the General Directorate. Following completion of the registration procedure, the new user will be able to carry out transactions in E-TUYS via his/her valid electronic signature.
The user may be either a foreign citizen or a Turkish citizen deemed suitable and appropriate by the Company. The Company may also authorize multiple users.
The duration of the user's authorization shall be limited to a specific time period to be determined by the company. However, if a user has been previously authorized, a time extension for the authorization may be requested from the General Directorate, instead of re-appointing the user. Should this be the case, authorization of said user will be temporarily suspended during the time period between the expiration of the user's original authorization and the approval of the time extension.
A Company may terminate the authorization of its user at any time by applying to the General Directorate. In order to apply for such termination or withdrawal of authorization, the Company must provide a notarized letter of dismissal to the General Directorate. The user may also resign from this duty by applying to the General Directorate and presenting the necessary documents. These documents must show that a written notification has been made by the user to the Company, either through a notary public or with a registered letter with return receipt.
In order to fulfill the foregoing informational obligations in a timely manner, affected Companies should complete the registration of their authorized users as soon as possible.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2018. A link to the full Legal Insight Quarterly may be found here.
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