Turkey: Regarding The Incorporation Of A Joint Stock Company (A.S.) Or Limited Company In The Republic Of Turkiye

Last Updated: 22 April 2008

Article by Pekin & Pekin

According to the Turkish Commercial Code (Law No. 6762), the Direct Foreign Investment Law (Law No. 4875), the Communiqué Regarding the Implementation of Foreign Direct Investment Law published in the Official Gazette dated August 20, 2003 and numbered 25205 and the Communiqué (Domestic Trade: 2003/3) Regarding the Principles Applicable on Foundation of and Amendments to the Articles of Association of Joint-Stock and Limited Companies issued by the Ministry of Industry and Commerce dated July 25, 2003, the following procedures should be taken in order to incorporate a joint stock or limited company in the Republic of Türkiye:

1. The total paid up capital of a limited company (limited sirket) cannot be less than TRY 5,000 (which is approximately USD 3,600) and the total paid up capital of a joint stock company (anonim sirket) cannot be less than TRY 50,000 (which is approximately USD 36,000). A limited company requires a minimum of two shareholders and a joint stock company, five, all of which may be foreign companies;

2. Without prejudice to the specific provisions of the Turkish Commercial Code pertaining to simultaneous foundation of joint-stock companies and the provisions of the Capital Markets Law, the stages of foundation of a joint-stock or limited company are as follows:

(a) Drafting of Articles of Association and the notarization of the same by a Notary Public

The Articles of Association must include all the issues referred to in the Turkish Commercial Code, must be in writing, and must be signed by the founders and be certified by a notary public. The Articles of Association are required to include the following information:

(i) Founders

The Articles of Association will indicate the name and surname and address of the founders, and nationality of the foreign founder(s), if any.

(ii) Corporate Name

Corporate name will be designed so as to indicate the fields of activity of the company pursuant to the provisions of the Turkish Commercial Code. It is obligatory to incorporate the words "joint-stock company" (i.e. incorporated company) or 'limited company" in the corporate name.

As the corporate names of legal entity merchants are under protection throughout Turkey, the chosen corporate name must not have previously been registered in any trade register. Corporate name must not be untrue and contrary to the public order or designed in such manner to mislead third persons about the size and significance or financial situation of the corporation. The words "Turk", "Turkey", "Republic" and "National" may be used in a corporate name only by a Decree of the Council of Ministers.

Corporate name will be in Turkish. However, incorporation of words in foreign languages in the corporate name may be permitted, provided that (i) they are not contrary to the laws and the national, cultural and historical interests of Turkiye, (ii) the trademark or trade name of the goods or services included in the fields of business of the corporation is in a foreign language, and (iii) the corporation has foreign shareholders.

(iii) Registered Head Offices

Province and town of the registered head office of the corporation are required to be mentioned in the Articles of Association. Furthermore, full address of the corporation is also required to be mentioned therein.

(iv) Objectives and Fields of Business

The objective and the scope of activity of the corporation is required to be mentioned in the Articles of Association.

Articles of Association must indicate a certain scope of activity at least on the basis of market sector where the corporation intends to be active. Articles of Association must not be drafted so as to cover all possible scope of activities. Objectives and fields of activity that may be included in the Articles of Association are limited to the fields referred to in the corporate name.

(b) Registration in Trade Registry and Announcement of Foundation of Corporation

Within 15 days after the date of the notarization of the Articles of Association by a notary public, the corporation will be registered at the Trade Register where the head office of the corporation is located or affiliated. The corporation acquires its legal entity upon registry of the same with the relevant Trade Register. Following the registry, the information required to be declared to the public will be announced in the Trade Registry Gazette. The petition for registration will be appended by the documents listed in Annex 1 herein below.

3. Information to be provided pursuant to Foreign Direct Investment Law

According to the Communiqué Regarding the Implementation of Foreign Direct Investment Law published in the Official Gazette dated August 20, 2003 and numbered 25205, foreign shareholding companies are required to provide certain information to the Foreign Investment General Directorate regarding the capital and activities of the company (to be provided until the end of May each year), payments made to the capital accounts (to be provided within 1 month as of the date of payment) and the share transfers either between the shareholders or from the shareholders to any third party (to be provided within 1 month as of the date of the transfer).

4. Joint-Stock Companies of Which Foundation and Amendments to Articles of Association are Subject to a Prior Permit of
the Ministry of Industry and Commerce

According to Article 273 of the Turkish Commercial Code (as amended by Article 2 of the Law 4884), foundation and the amendments to Articles of Association of banks, special financial institutions, insurance companies, financial leasing companies, factoring companies, holding companies, foreign exchange dealers, public bonded warehouse operators, public companies subject to the Capital Markets Law, and free trade zone founders and operators are subject to the prior permission of the Ministry of Industry and Commerce.

Annex-1

Documents Required To Be Submitted In The Process Of Foundation Of Joint-Stock Or Limited Companies



A- Four copies of the Company Incorporation Notice Form and petition, in the format shown in Annex 2 hereto, duly filled in and signed by the authorized signatory of the company;

B- Three notary-certified copies of the Articles of Association, one being the original copy;

C- Notarized signature specimens of the authorized signatories;

D- A letter of undertaking issued in accordance with Article 29 of the Trade Register Communiqué;

E- Bank receipt evidencing the payment made to the consumer fund account in an amount equal to one per mille (0.1%) of the capital;

F- Original copy of the 'incorporation permit' obtained from the Ministry of Industry and Commerce by the joint-stock companies incorporation that are subject to prior permission of the Ministry of Industry and Commerce;

G- Identity card photocopies and residence certificates of real person founders.

In addition to the documents listed above:

  • a receipt issued by a bank or a special financial institution evidencing payment of the capital, with respect to companies which are required to be founded by an original paid-up capital pursuant to the special laws, and companies of which capital is required to be paid at the time of foundation pursuant to their Articles of Association;
  • if the company is founded for operations in the field of organization of fairs, documents proving that the shareholders and the non-shareholder authorized signatories of the company have not filed bankruptcy or entered into composition with their creditors or have not been convicted of infamous crimes such as embezzlement, misappropriation of funds, defalcation, bribery, theft, swindling, fraudulency, abuse of confidence and fraudulent bankruptcy, other than crimes committed by imprudence;
  • if the company is founded by way of change of kind, the court verdict for appointment of experts and the expert report relating to determination of the networth of the company whose kind is changed;
  • if the company whose kind is changed is a collective society or a limited partnership, a letter obtained from the relevant tax department verifying that the company partners do not have overdue tax liabilities and debts;
  • if rights or movable or immovable properties are injected as capital in the company to be founded, the court verdict for appointment of experts and the expert report relating to determination and assessment of value of such rights or movable or immovable properties;
  • if securities are injected as capital in the company to be founded, the court verdict for appointment of experts and the expert report relating to determination and assessment of value of such securities, or the report of a Sworn Financial Advisor on in connection therewith;
  • if securities issued by companies established in foreign countries are injected by the foreign partners as capital in the company to be founded, original and Turkish translation of a value assessment report to be issued by the value assessment authorities authorized by the current applicable laws of the related foreign country or by the experts appointed by the competent courts of the related foreign country or by the international value assessors and to be certified and attested by the Turkish Consulate therein or according to the provisions of the "Convention About Abrogation of Obligation of Attestation of Foreign Official Documents" signed within the frame of "The Hague International Private Law Conference";
  • for real person founders who are foreign nationals, if any, the original accompanied with a photocopy of the same or a notary-certified copy of the passport, and for legal entity founders who are foreign nationals, original and a notary-certified translation of the certificate of activity to be issued by the competent courts or the chamber of industry and/or commerce where the legal person founder is enrolled, and to be certified and attested by the Turkish Consulate therein or according to the provisions of the "Convention About Abrogation of Obligation of Attestation of Foreign Official Documents" signed within the frame of "The Hague International Private Law Conference" (including apostil declaration);
  • if the capital in kind is a real estate, a letter to be obtained from the relevant land registry verifying that the real estate is not restricted by any encumbrance, or if the capital in kind is a motor vehicle, a letter to be obtained from the relevant traffic office verifying that the motor vehicle is not encumbered by any reserve of retention of title;
  • if there is a municipality or any other local government or any affiliated company thereof among the founders of the company to be founded, a copy of the Decree of the Council of Ministers permitting its participation in the company;
  • the Turkish citizens resident abroad are also considered as a foreign investor by the Direct Foreign Investment Law 4875, if such Turkish nationals apply to the Trade Registry for such investments under the said Law, work permit or residence permit of such Turkish nationals; and
  • chamber activity certificate attached to the reports to be issued by the professionals licensed as per the Law 3568 will also be appended to the petition.

Annex-2

Company Foundation Notice Form And Petition



NAME OF COMPANY / BRANCH:

FIELDS OF BUSINESS OF THE COMPANY:

LEGAL ADDRESS OF COMPANY / BRANCH:

City Code: ...... ZIP Code: ......

Trade Registry Number of Company:

Tax Department and Tax Account Number of Company:

Date of Foundation of Company:

Term of Company:

Telephone Number of Company:

Head Offices of Company (Province and Town):

FUNDING OF COMPANY CAPITAL (Million)

Company Capital (Billion)

................. TL.

  1. Cash Capital Invested From Abroad : ............ TL.
  2. Profit Earned in Home Market : ............ TL.
  3. Money Receivables in Home Market : ............ TL.

    TOTAL CASH CAPITAL : ............ TL.

  1. Machinery – Equipment : ............ TL.
  2. Securities : ............ TL.
  3. Industrial and Intellectual Property Rights : ............ TL.
  4. Rights of Search and Extraction of Natural Resources : ............ TL.
  5. Others : ............ TL.

TOTAL CAPITAL IN KIND : ............ TL

Value per Share (Thousand)

............ TL.

THE COMPANY FOUNDERS AND THEIR POSITIONS IN THE COMPANY BODIES

Name & Surname / Title and Address

Nation-ality

Tax Account No.

Citizenship Identity No.

Foreign Partner Passport No.

Amount of Capital (Million TL)

............

Board of Directors

Auditor

Manager of Limited Company

Proxy of Branch of Foreign Company

  • Sections relating to positions in bodies will be filled in by marking the appropriate box with (x).
  • The word "branch" in the corporate name section refers to branches of foreign companies in Turkey.

THE COMPANY FOUNDERS AND THEIR POSITIONS IN THE COMPANY BODIES

Name & Surname / Title and Address

Nation-ality

Tax Account No.

Citizenship Identity No.

Foreign Partner Passport No.

Amount of Capital (Million TL)

............

Board of Directors

Auditor

Manager of Limited Company

Proxy of Branch of Foreign Company

INFORMATION ABOUT THE WORKPLACE

NUMBER OF WORKERS TO BE EMPLOYED

DATE OF START OF EMPLOYMENT OF WORKERS

1st Workplace No. of Minimum Salaried: No. of Other Workers: TOTAL:

2nd Workplace No. of Minimum Salaried: No. of Other Workers: TOTAL:

IF THE WORKPLACE IS NOT OWNED BY THE COMPANY

1st Workplace

2nd Workplace

WORKPLACE

Amount of Rent

WORKPLACE OWNER

Name and Surname

Tax Account No. (if any)

Address

TYPE OF TAX LIABILITIES

TO BE MARKED BY THE TAXPAYER

TO BE FILLED IN BY THE TAX DEPARTMENT

TYPE OF TAX

TAX CODE

TAX LIABILITY RECORD

DATE OF START OF TAX LIABILITY

CORPORATE TAX

0

0

1

0

.../.../....

PROVISIONAL CORPORATE TAX

0

0

3

3

.../.../....

VALUE ADDED TAX Monthly

Quarterly

o

o



0

0

1

5

.../.../....

INCOME WITHHOLDING TAX Monthly

Quarterly

Others

o

o

o



0

0

0

3

.../.../....

CORPORATE WITHHOLDING TAX (Art. 24 of Corp Tax code)

0

0

1

1

.../.../....

STAMP TAX

0

0

4

0

.../.../....

BANK AND INSURANCE TRANSACTIONS TAX

0

0

2

1

.../.../....

.../.../....

.../.../....

INFORMATION ABOUT ACCOUNTANT / ACCOUNTANT & FINANCIAL ADVISOR / SWORN FINANCIAL ADVISOR / COMPANY COUNSEL

Name and Surname

Tax Account No.

Tax Department

Professional Chamber

Chamber Registry No.

Date of Contract

Contract No.

Signature

Seal

I, the undersigned, as the legal representative of the Company . . . . . . , hereby represent and warrant that the information given in this form are correct and true, and I hereby request record of tax liability for the types of tax . . . . . . . . . . marked herein with effect from .../...../........

This is to certify that all information given in this form is in conformity to the documents submitted and filed by the taxpayer.

APPROVING TRADE REGISTRAR

Name and Surname :

Position :

Signature :

Date : ..../..../.......

PERSON AUTHORIZED TO REPRESENT THE COMPANY



Name and Surname :

Tax Account No. :

Signature :

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