Since last 10 years the financial developments and the promising
financial and technological progresses notably in energy, tourism
and infrastructure sectors have attracted the foreign
investors' interest. Since the number of foreign investments
has been increasing within these developments, the question, if a
company may have foreign shareholders and foreign board members has
come to the fore. This was actually the result of the frequent
change in laws as part of adaptation progress to E.U
One of the principals, the New Turkish Commercial Code
("TCC") regulating the shareholdering and managerial
authorities in companies has also got its share of this frequent
changes and the question remained same in foreign companies'
mind wishing to invest in Turkey: Can we appoint a foreign board
member, shareholder, manager or assign a foreign employee?
In 2012, TCC was requiring at least one Turkish board member
domiciled in Turkey which was chaotic for many multinational
companies to find reliable board members at their first step into
the country however this has been changed and such requirements
have been abandoned. Therefore such an amendment has motivated the
foreign companies even it was again a frequent change but the
requirements of work permit still remains the same. As is known,
companies employing foreign personnel without work permit are fined
pursuant to the Law on the Work Permits. The employer in Turkey and
also the foreign employee will be faced a process with certain
conditions. Both the employer and the employee shall submit an
application with a certain time limit. In order to avoid delays and
issues in this application process, it is essential to organize the
The work permit procedure may vary depending on the sector and
the position of the foreign employee. In this regard, it shall be
considered if the manager is only a board member or if he/she is a
shareholder at the same time. There are various criteria for work
permit applications required by the Ministry for Labor and Social
Security (the "Ministry"), some of which are as
Employment of at least five Turkish
employees in the related company: This measure is applied
differently for foreign shareholders and for other personnel.
A certain share amount: Foreign
shareholder shall hold a certain rate of shares which shall
correspond to a minimum amount of TRY 40.000.
Criteria for foreign direct
investments:In order to promote foreign direct investments in
Turkey, the work permit procedure for key personnel in such
companies have been simplified. Accordingly, the work permit
application criteria and procedure for key personnel employed by
specific foreign direct investments differ from key personnel
employed by other companies. Criteria for key personnel has been
defined and regulated by the legislation on foreign direct
investments. If the foreign personnel do not fulfill the
requirements for key personnel pursuant to the related legislation,
the work permit application procedure will be different.
Within the financial and technological developments and a big
financial development potential, Turkey has been preferred by a
growing number of investors and managers. Abovementioned legal
amendments in the Turkish Commercial Code regarding the
shareholders and board of directors in capital companies may be
regarded as a facilitation of company establishments by foreign
investors. Accordingly, a company may be established by foreign
shareholders and a board of directors may consist of foreign board
members completely. Even if the criteria may differ, the obligation
to obtain a work permit applies to shareholders as well as to board
members or key personnel that remains same.
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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