Principles regarding Foreign Partnership Companies' acquisition of real estate and limited rights in Rem of Companies in accordance with Article 36 of the Land Registry Law numbered 2644
Regulation regarding the Principles of the Acquisition and Usage of Limited Rights in rem and Real Estate Ownership Rights in Turkey for Companies and Their Affiliates in Turkey which are within the Scope of Article 36 of the Land Registry Law numbered 2644 ("Regulation") was published in the Official Gazette dated 16 August 2012 and entered into force on 18 August 2012.
As it is known and specified in the first paragraph of Article 36, p.1 of the Land Registry Law; companies which are incorporated and located in Turkey and whose 50% or more of shares are held by
- foreign national real persons,
- legal entities, which are incorporated in accordance with the legislation of foreign countries,
- international institutions,
or having the power to appoint or remove majority of the persons, who have the management authority, may acquire and use real estate ownership or limited rights in rem for purpose of performing activities stated within their articles of association.
It has been mentioned within Article 1 p.1 of the Regulation that the circumstances mentioned hereinbelow shall not be taken into consideration for determining the rate of shareholding of foreign investors in a company:
- Persons, who are indicated within Article 28 of the Turkish Citizenship Law No. 5901 dated 29 May 2009; (Natural born citizens, who lost their citizenships by way of obtaining exit permit, and their descendants up to the third degree),
- Shares owned by the Turkish citizens residing abroad within the companies or the affiliates located in Turkey
Pursuant to the new rule, the companies subject to the Regulation shall need to obtain permission for acquiring ownership and limited rights in rem from the relevant Governorship. Upon receiving the application for permission, the Governorship shall demand the determination of the region where the concerned real estate is located as well as the identification of whether such real estate is falling within the area of a prohibited military zone, military security zone or in the area determined within Article 28 of the Law numbered 2565, in accordance with Articles 5 and 6 of the Regulation. In case it is notified that such real estate is located within the referred zones, the Governorship shall submit one each copy of other application documents within three working days following the said notification to the Chief of General Staff or to the authorised commanders and demand to be notified that whether the request for acquisition of real estate is proper to national security or not, within at most thirty days. In case no response is received within this period, the Governorship may take the necessary actions by way of ruling that the request for acquisition of real estate is proper to national security.
Another inspection shall be made by the Governorship shall be to inspect whether the real estate and limited rights in rem that are notified to the Governorship by the General Directorate of Land Registry and Cadastre, are used within the framework of the subjects of activities determined within the articles of association of a company or an affiliate or not. Such examination shall be evaluated and concluded by the Governorship Commission.
Additionally, it should be noted that the companies within the scope of the Regulation are required to notify the changes in their shareholding structures occurring due to share transfers to the Ministry of Economics within a month at the very latest.
Moreover; it is ensured that the provisions of the Regulation shall not apply to circumstances mentioned herein below:
- The acquisition of real estate ownership and limited rights in rem of foreign partnership companies which are not falling within the scope of Article 36 of the Code numbered 2644,
- Establishment of pledges by companies or subsidiaries,
- Property acquisitions which are in the scope of foreclosure of pledged real estate,
- Transfers of real estate ownership and limited rights in rem due to merger and spin-off transactions realised in companies,
- Acquisitions of real estate ownership and limited rights in rem within special investment zones such as organised industrial zones, industry zones, technology development zones and free zones,
- Acquisition of real estate by banks due to transactions, which are deemed as credits within the scope of Banking Law No. 5411 dated 19 October 2005 or in order to collect their receivables, provided that obligation of disposal within specified time, in line with related legislation, continues.
The sample undertaking which must be submitted by the companies subject to the Regulation to the Governorship is also attached to the Regulation.
You may reach the full text of the Regulation via the following link.
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.