Establishment of a company is one of the first steps of
penetration into a foreign market. The frequently asked questions
by foreign investors is how to establish a company and which
company type would be most recommended for the investors. There is
no question that this will vary from sector to sector and from one
investment volume to another but it is still crucial to know the
basics of company establishment procedures to better navigate in a
foreign investment climate.
Company establishment facilitated within the Turkish Commercial
From the investors' side, the company establishment
processes may be regarded as a long process with a strict
bureaucracy. Especially foreign investors may be in the opinion
that they would be subject to a different process than domestic
investors. The repealed laws have differed between domestic and
foreign investors, especially the minimum company capital for
foreign investors varied from the minimum capital which the
domestic investors had to pay. As from entering of the recent
Foreign Direct Investmets Law in force in 2003, such differences in
incorporation between foreign and domestic investors have been
removed. Accordingly, both investors will be subject to the similar
conditions in company establishment in Turkey. Moreover, the New
Turkish Commercial Code that has entered into force in 2012 has
facilitated procedures during and after the company establishment
in accordance with the harmonisation with the EU-Directives.
Enablement of the establishment of a single-shareholder company and
abolition of ultra vires principle may be regarded as most
essential reforms that have been regulated by the New Turkish
Facilities for shareholders or directors abroad
As mentioned above, the Turkish Commercial Code provides
facilities also after the establishment of a company. For taking
and implementation of company resolutions, the meeting of
shareholders and board of directors is a requirement. The New
Turkish Commercial Code has enabled the shareholders and board of
directors' meeting electronically under the conditions stated
in the Commercial Code. Due to this facility, a board of
directors' member or a shareholder will be able to participate
these meetings even if they are abroad. Consequently, the company
resolutions will be passed more accelerated.
Company types in the Turkish Commercial Code
Types of companies that have been regulated by the Commercial
Code are partnerships and capital companies. The company type to
establish may vary depending on the sector in which the company
intends to operate and on the investment's amount. However,
both limited liability companies and joint stock companies have
advantages and disadvantages.
In several sectors such as banking and insurance, the
establishment of a certain company type is a requirement for
operating in these sectors. Accordingly, it is very important to
determine the right sector and the requirements of this sector. The
establishment amounts may also vary depending on the company
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.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
Determining the limits of the capacity to have rights and
obligations of a joint-stock or limited liability company
("Company") is very crucial since it directly affects the
validity of a transaction that a Company performs
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