1. Legal Base
Acquisition of Real Estate by Companies with Foreign Capital is regulated in "Regulation on Acquisition of Real Estate by Companies with Foreign Capital" has been enacted on 16.08.2012 (Official Gazette No. 28386) ("The Regulation").
The legal basis for foreign real persons, foreign companies which are not established in Turkey and companies for foreign capital are different. This information note would only briefly analyse the acquisition process companies with foreign capital.
2. Definition of Companies with Foreign Capital
According to the Regulation, a company is deemed as a company with foreign capital if;
I. A foreign real person or a company (or any legal entity) which established in a foreign company,
- Holds 50% of or more of the shares in a company established in Turkey or,
- Entitled to appoint/discharge majority of the persons in the governing body in a company established in Turkey
II. A company with foreign capital becomes a shareholder in a company established in Turkey and such foreign investor holds (directly or indirectly) 50% or more of the shares in the Turkish affiliate.
Accordingly companies with foreign capital are only entitled to acquire real estate or have in rem rights for the purpose of performing its business as determined in its Articles of Association. The companies which do not deemed as a company with foreign capital (i.e. holds less than 50% of the shares) would not be subject to the legal limitations listed in the Regulation.
3. The Procedure
According to the Regulation;
The companies with foreign capital must make an application to the provincial directorate of planning in the Governorate ("The Governate") in which the target real estate is located. The Governate examines whether the real estate is not located within a forbidden military zone, a military security zone or a strategic zone, private security zone and, if the real estate is within such zones by communating with relevant government and military institutions. If the real estate is located in such a zone, a commission appointed by the Governorship will decide on the real estate acquisition request.
If the application is approved by the Governate, the company with foreign capital must acquire the target real estate within 6 months following the receipt of the decision of the Governate. Failing to abide by this period, the company must renew its application.
4. Notification in the event of share transfer
It is important to note that, if a company has a real estate in Turkey, and the shareholding structure of the company is changed and the company is deemed to become a company with foreign capital; the company must notify such change to the Ministry of Economy within one month following the transfer of shares.
5. The use of real estate
It is also essential that the companies with foreign capital must use the real estate in accordance with its field of activity as determined in its Articles of Association. The Governate checks whether the company abides such rule. In the event that it is determined that the company does not use the real estate in accordance with its field of activity, the Governate notifies the company. The company is given a period of six months to abide by such rule. Failing to do so, the real esate would be liquidated.
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.
