Turkey: Establishing Joint Ventures In Turkey

Last Updated: 30 May 2008
Article by Bener Law Office

The considerable increase of foreign investors into the market, particularly in the form of joint ventures has played a significant role in the reform and liberalization of the laws governing foreign investors as part of Turkey's economic program adopted after 2001. These reforms have been significant in Turkey's pursuit for EU accession. Today, Turkey boasts the 17th largest economy in the world attributable to its commitment to sustain a strong economic framework to foster an environment enabling businesses to prosper. Alongside other factors, its outward-oriented economic development strategy has spurred Turkey to adopt investment incentives that have certainly been a contributing factor to the increase of investment. This has also expedited the process in which foreign investors are able to establish joint ventures in Turkey.

Reasons for establishing a Joint Venture in Turkey

Aside from its ability to maintain a stable intra/extra-economic market, Turkey is the 13th most attractive country for foreign direct investors, probably due to its demographic dynamism. These are, to name a few; a populace of over 70 million of which 65% are below the age of 35 years, a large potential workforce, a sophisticated infrastructure (legal support, financial and consultancy services), an ever increasing number of professionals with purchasing power, Turkish work ethics and the local market within Turkey itself.

Another influential reason for the attraction of foreign investors into Turkey is its strategic position. Turkey lies on the borders between Europe and Asia and is used as a gateway to achieve strategic goals to enter into the Asian or European market. This will be of particular importance for those wanting to access new markets in EU member states as Turkey signed the European Customs Union (ECU), which has been effective since 31st December 1995. The ECU involves preferential trading agreements between EU member countries where goods and services imported are exempt from any duties, and a common export tariff. A by-product of such membership has meant Turkey has had to harmonize its intellectual and industry property rights and to adopt standardization, quality and accreditation controls. This has had an incremental impact on the overall trade environment and the international standard a foreign investor would expect to operate in.

To exemplify, one of the main concerns among foreign investor's venturing with domestic companies is that of transparency. Being able to obtain accurate data on which to base valuations and other decisions may be of concern for the foreign investor as the accounting standards of the domestic partner may be vary to that used in international standards. Turkey has alleviated this problem by establishing the Turkish Accounting Standards Board, having its own legal status and administrative and financial autonomy, established by Law No: 4487, which regulates accounting and financial reporting. The Turkish Accounting Standards Board decided to adopt and be in full compliance with the International Financial Reporting Standards (IFRS) to allow integration of international accounting practices, and to be in harmony with the EU legislations and standards.

The Turkish Accounting Standards Board requires that all enterprises established under the Turkish Commercial Code in Turkey must prepare statutory financial statements in compliance with the Turkish Accounting Standards Board. The implication of this for foreign investors is that the valuations of local enterprises will be valued on the same principles adopted by international standards. This makes all accounting data transparent and more reliable for all parties involved.

Further efforts to modernize the legal infrastructure of Turkish law can be illustrated in the recent proposal to modernise the Turkish Commercial Code which is in the pipeline, envisaged to be effective some time this year. The main reasoning behind the revision of the Commercial Code was to modernize it in line with the EU harmonization attempts.

Turkey has an impressive track-record of some of the most successful joint ventures established with foreign companies and illustrates the reasons as to why Turkey is becoming an increasingly popular contender for foreign investors as an attractive place to invest in. A few examples of successful joint ventures, in the form of partnerships and consortiums that have taken place to date are provided below:



October 2000


Toyota, a Japanese company, one of the world's largest automobile manufacturer's, made a strategic joint venture with Sabancı Holding, a Turkish to form the ToyotaSA. ToyotaSA is the distributor of Toyota branded automotive products in Turkey and conducts its marketing, sales, and after-service of locally produced Corolla products.


The joint venture was established as part of Toyota's objectives for expansion and increasing sales volume in Europe, their goal to hold 15% of the global automobile market and to be in the world's top 3 automobile producers.


The establishment of ToyotaSA enabled Toyota entry into the European market and the Turkish automotive factory has been the leading supplier of Corolla Verso's into Europe. New markets include Germany, Italy, France and the UK.

The Corolla plant in Turkey is one of the world's best state-of-the-art automotive plants and runs at 100% capacity.

The branch employs more than half a million people.

The Turkish factory alone has produced over €2.2 billion worth of automobiles

The venture enabled an 8% holding of the automobile market share and announced its 11th consecutive year of sales in Europe, with the Toyota Carolla Sedan, produced in Turkey, being the 3rd best-seller in Europe.

Borusan Mannessman Boru


Year 2004


A joint venture was established between Borusan, a Turkish steel company and Mannessman Boru, a German company, namely, Borusan Mannessman Boru which welds steel pipes and profiles as well as plastic pipes.


Annual manufacturing capacity rose to 70 thousand tons upon realization of the merger.

They achieved USD 520 million in 2006 and now stand as one of the top five steel pipe producers in Europe.

Koç-Shell: Tüpraş


January 2006


Koç, one of Turkey's largest holding companies and Shell, a worldwide group of oil, gas and petrochemical companies, established a consortium and won the tender for the privatization for a 51% stake in Tupras (Turkiye Petrol Rafinerileri), an oil refinery company and Turkey's largest industrial enterprise, for USD 4.14 billion. Operations are undertaken under the joint stock company name; Enerji Yatırımları A.Ş.


To strengthen its superior position in the oil refinery market.


They have now reached coverage throughout Turkey including areas far from the location of the Tüpras refineries, and currently control all of Turkey's refining capacity.

Samsonite & Desa


October 2007


Samsonite Group, the world leader in travel bags, luggage and accessories and Desa, the leading manufacturer in the production, distribution and retail of luxury leather goods and travel goods in Turkey. Samsonite acquired a majority stake of the strategic partnership.


Samsonite wanted to expand into Eastern Europe and strengthen its market presence in Turkey, Georgia, Azerbaijan, Armenia and Syria.

Legal Aspects of Joint Ventures in Turkey

Although there is no specific legal definition of a joint venture under Turkish commercial law, the very general understanding that can be derived from common commercial practice under the scope of Company Law and Obligation Law, is that a joint venture is the engagement of two or more individuals or legal entities pooling together their resources for the purpose of executing a particular commercial undertaking.

Under the Foreign Direct Investment Law, Law No: 4875 ("new FDI Law"), dated17th June 2003, the burden for foreign investors with foreign capital to acquire certain permits in order to establish or participate with a company established under Turkish Law has been removed. To this extent, all transactions for establishing a JV by foreign investors impose the same procedure as that of domestically owned companies established under the Turkish code of Obligations. The rationale behind the new FDI Law was to establish an equal and non-discriminatory avenue in advocating local and foreign relationships by removing the initial screening process, share transfer and minimum capital requirements.

Vehicles for Establishing the JV in Turkey

Joint ventures are relatively easy to establish in Turkey thanks to the introduction of the new FDI Law in 2003. Once all the requisite documentations have been prepared and furnished to the relevant authorities, official establishment of the joint venture takes approximately 1-3 days.

There are several ways in which joint ventures can be formed in Turkey. The structure in which the joint venture is to be established is significant to the operation of the venture and must therefore be chosen carefully..

Under Turkish Law, a joint venture may be formed under two 'umbrellas';

  • a Commercial Company (ticaret şirketi), governed by the Turkish Commercial Code or

  • an Ordinary Company (adi şirket), governed by the Turkish Code of Obligations.

Commercial Company

A Commercial Company is registered and recognized as having a legal identity separate from its shareholders. According to the Turkish Commercial Code, the commercial enterprise JV may be established under five titles; an unlimited partnership (general partnerships), limited partnerships (special partnerships), companies limited by shares (stock corporations), limited liability companies (corporations without shares) and cooperative companies (cooperative societies).

The most common types of Commercial Companies in Turkey established by foreign investors are Joint Stock companies (Anonim Şirket), Limited Liability companies (Ltd.Sti.), Branch offices and Liaison offices. Limited liability companies would seem more suitable and probably more attractive for companies that require a simple shareholding structure and management i.e. between family members. For example, a limited liability requires an initial capital of TRY 5,000 and 2 shareholders at a limit of 50 shareholders, whereas a joint stock requires an initial capital requirement of TRY 50,000 and 5 shareholders. This aside, a joint stock is the preferable route for a JV as opposed to limited liability as it allows for a more complex structure and is especially more flexible for transfers of shares due to its more flexible nature.

Ordinary Company

The other form of joint venture, which is an Ordinary Company governed by the Turkish Code of Obligations, is not recognised as having a legal identity. In most cases, a contract will bind the understanding between the parties but where no contract or agreement is assigned, the venture will be governed solely by the provisions governing Ordinary Companies under the Turkish Code of Obligations or Commercial Code. The two types of Ordinary Companies are normal ordinary partnerships and consortiums. Normal ordinary partnerships and consortiums are used as a vehicle for foreigners who want to partner with Turkish entities or participate in a tender and are ideal for achieving relatively short-term specific objectives e.g. construction of a bridge.

These types of Ordinary Company may be established in two forms;

Normal Ordinary Partnership


  • All parties to the company are jointly responsible for the success or failure of the project.


  • Consortium is distinguished from the normal ordinary partnership because each party may be liable only for their contribution to the project conditional on the consent of the creditor.

  • However, the parties' separate liability is exclusively applicable to liabilities owed to the creditors. All other liabilities owed to any other parties shall be shared jointly.

Once the necessary procedure has been administered, the joint venture is officially established and the project or undertakings may commence. The next step will be to inform the General Directorate of Foreign Investment of the establishment of the joint venture (this is merely a formal procedure for records). However, when establishing a joint venture, it is imperative that the parties involved must observe the Turkish competition law regulations as to its applicability to them.

Competition Law

Joint ventures are wide in their spectrum of their cost-benefit ratio. The cost being their potential negative influence on the market they operate in and the benefit being their potential pro-competition effect. For this reason, joint ventures warrant assessment in terms of their competitive effect. Turkey's competition laws are parallel to the European Union Council Regulation on competition.

The Turkish competition law and regulations have a monetary and capacity threshold for joint ventures, its purpose being to safeguard competition in the respective market. These laws and regulations provide that permission from the Turkish Competition Board does not need to be sought as long as; the combined contributions of the parties do not exceed TRY 25 million nor will the joint venture result in it occupying 25% or more of the relevant Turkish market it will enter into. However, if it does exceed these thresholds, then the joint venture must apply to the Competition Board where they may allow the joint venture under a two phase application, namely, "exemption" and "negative clearance".

An exemption sets out certain sector-specific criteria's which may exempt the applicant joint venture to be established. If the applicant joint venture does not fall under "exemption", then an application for "negative clearance" would be sought. However, the likelihood of reaching this stage is very small and only becomes necessary in very exceptional cases. In a case of negative clearance, the merits or eligibility for qualification of the joint venture is highly case-specific and is generally based on the requirement, amongst others, that although the applicant joint venture is above the threshold, its presence will not affect the dynamics of the respective market. If the Competition Board authorizes the joint venture, then the company may officially proceed with its intended undertakings.

Reasons for the Success of Joint Ventures in Turkey

In principle, when examining the pro's and con's of a joint venture, joint ventures seem destined for success. However, in practice, there is no concrete rule that assumes all joint ventures to be successful. Aside from the financial and corporate strategic aims of the parties involved, success of a joint venture is highly dependant on the relationship between the involved parties prior and subsequent to the joint venture, not to mention their differing cultural business ethics.

Considering this, the gap between international and Turkish practice codes is narrowing rapidly. Turkey has been able to set the pace for developing countries by adopting international standards in many respects. At the rate at which globalisation is occurring, it is vital that all countries position themselves to be more accessible and to welcome investments in order to receive the benefits that cross-border transactions may yield. This firstly requires establishing an environment in which businesses are firstly attracted to enter into, and then striving to maintain a healthy business environment where those businesses may operate successfully in. Turkey has not only recognised this concept but has also taken the steps to realize it.

Turkey is continually undergoing legal and regulatory reforms and restructuring in an attempt to modernize the way businesses are able to operate in as a response to businesses become increasingly complex and dynamic in order to achieve their objectives. Naturally, along with the reforms and new legislations that have been adopted in compliance with international standards, the business ethics and practices used in Turkey have also evolved to that of international standards. This, naturally, will enable common understanding between foreign and local partners which can greatly ease the strain and remove the reservations foreign investors have to partner with companies in developing countries. The favourable economic environment, Turkish business ethics and the Turkey's socio-economic qualities, combined, has probably contributed to the vast growth in the investments it has experienced over the past few years.

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