Turkey: Joint Ventures Under Turkish Foreign Direct Investment Law

Last Updated: 1 September 2010
Article by Onur Alper

I. Introduction

By the late 1980s, entry of foreign capital into Republic of Turkey has significantly increased, following the amendments in the foreign investment law. The considerable increase of foreign investors into the Turkish market, particularly in the form of business partnerships have played an important role for the economic development of Republic of Turkey. Foregoing foreign investments have stimulated an improvement in the commercial activities, business operations, technological progresses and industrializations which lead to the introduction of substantial transactions into the Turkish economy. In such transactions, foreign investors tend to collaborate with two or more companies to share the major risks of investing in a market. Another reason for such collaboration is the need for a strong company capital structure and advanced technological supplies.

II. Joint Ventures in the Turkish Legal System

Due to the limited financial resources of Turkish companies, collaboration activities to share the costs, experiences and risks, have increased. Although in some parts of the international area, such collaboration activities have been mandatory between foreign investors and a domestic company, in order for foreign investors to enter into a domestic market. Consequently terms of business partnership ("Joint Venture") have been introduced to the Turkish Legal System with the enactment of the Communiqué numbered 2009/2.1

The Turkish Code of Obligations (the "TCO") and the Turkish Commercial Code ("the TCC") do not regulate Joint Ventures in specific terms. However, taking into consideration of its characteristics, Joint Venture is deemed as a general partnership ("adi ortalık") whereby two or more legal entities or individuals ("Parent Companies"), who are independent of each other in legal and economical terms, gather for the accomplishment of a common task. A Joint Venture is generally created for a specific project and the main elements needed for a joint venture are either the individuals or the legal entities ("Partners"), a common objective, contributions and the agreement of the Partners.

III. Forms and Establishment of Joint Ventures in Turkey

There are several ways in which Joint Ventures can be formed in Turkey. The structure of the Joint Venture may be formed under two umbrellas; (i) a commercial company ("ticaret şirketi"), regulated by the TCC, (ii) an ordinary company ("adi şirket"), regulated by the TCO.

The most common types of commercial companies in Turkey established by foreign investors are joint stock companies ("anonim şirket"), limited liability companies ("limited şirket"), branch offices and liaison offices.

The other form of Joint Venture, which is an ordinary company governed by the TCO, is not recognized as for having a legal identity. It can be formed for profit-making or non-profit making purposes. In most cases, a contract will bind the understanding between the parties but where no contract or agreement is signed, the Joint Venture will be governed solely by the provisions governing ordinary companies under the TCO or TCC. These two types of ordinary companies are ordinary partnerships and consortiums, which are ideal means for foreigners to establish a partnership with Turkish entities. All partners of an ordinary company are jointly liable against third persons in succession, because their liability and the transactions of the Joint Venture and are unlimited.

IV. Specific Provisions of Foreign Direct Investment

Joint Ventures shall be established in Turkey by the introduction of the new Foreign Direct Investment Law ("FDIL")2 numbered 4875.

The FDIL was initiated with a motive to attract foreign investment in Turkey and raise its ability to attract more foreign direct investment and thereby, brought certain principles to protect the investors' rights and equal treatment for domestic and foreign capital companies.

In that regard, Article 3 of the FDIL states that it is free for the foreign investors to engage in foreign direct investment in Republic of Turkey, which means that there is no need for foreign investment anymore to obtain permission from the Undersecretaries of Treasury and there is no restriction on foreign ownership. Also the foreign direct investment cannot be expropriated or nationalized unless there is a public interest and fair compensation is paid, just as the case for domestic companies.

The foreign investors are free to transfer their proceeds gained from the foreign direct investment to abroad. The foreign direct investment can be made through allocation of cash, securities, machinery and equipment, intellectual property from abroad or through the allocation of economical values such as profit, receivables, other proceeds or rights with regard to the exploration and operation of natural resources from domestic sources.

Additionally, their following rights are secured with FDIL;

  • acquisition of real estate in Turkey
  • dispute settlement either in local courts or international arbitration bodies
  • valuation of non-cash capital
  • work permits for foreign personnel
  • opening a liaison office

In respect of the FDIL, foreign investors are defined and categorized as the foreign individuals, foreign legal entities and institutions or Turkish nationals residing abroad. The foreign investment is pursued either through the incorporation of new companies or establishment of branch or liaison offices or participation therein through share purchases. Pursuant to Article 9 of the FDIL, Joint Ventures are deemed as general partnerships and are accepted as models for FDIL. It clearly states that the foreign investors can make investments in Republic of Turkey by incorporating one of the company types specified under TCC or establishing an ordinary partnership within the scope of the TCO. The incorporators of the company can all be foreigners since there is no provision in the legislation, which prohibits or restricts the incorporators of a company to be foreigners. As the companies within the scope of the FDIL are deemed and defined as Turkish companies, such companies will be incorporated and registered pursuant to the incorporation procedure of a Turkish company.

It should also be noted that other kinds of partnerships which are not specified under the TCC can also be established by foreign investors based on an agreement such as consortiums, business associations or Joint Ventures, but they will still be deemed as ordinary partnerships within the context of the FDIL.

V. Conclusion

In the light of the above mentioned, one can argue that, legal infrastructure in Turkey has paved all the way to the success of Joint Ventures in Turkey , although obviously the financial and corporate strategic aims shall be highly related to the success of a Joint Venture.

Turkey's approach to foreign direct investment is to promote foreign direct investments and consequently prepared a competitive legal basis to attract investors in Turkey. As a result, Joint Ventures, as a means of foreign direct investment, are also encouraged and simplified by new FDIL. With this policy in practice for almost a decade, Turkish economy is transforming into a highly attractive market for foreign investors.


1. Published in the Official Gazette dated April 01,2009 and numbered 27187.

2. Published in the Official Gazette dated June 17,2003 and numbered 25141.


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”

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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

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