Setting Up a Company in Turkey: A Guide for Foreign Investors

Legal Framework

Under the Foreign Direct Investment Law No. 4875, foreign investors are treated equally with Turkish investors. As a rule, no prior permission is required to set up a company in Turkey or to become a shareholder in an existing one; companies are incorporated under the Turkish Commercial Code No. 6102 in the same way as companies with Turkish shareholders. In regulated sectors such as banking, insurance, energy and media, however, a licence or permit must be obtained from the relevant authority before starting operations.

Choosing the Right Structure

The first decision is the structure through which the business will operate in Turkey:

• Joint stock company (A.Ş.): Share transfers are flexible, different share classes and privileges can be created, and bringing in new investors is straightforward. The minimum capital is TRY 250,000; for non-public companies adopting the authorised capital system, the initial capital must be at least TRY 500,000.
• Limited liability company (Ltd. Şti.): Management is simpler, but share transfers require a notarised agreement and general assembly approval, and shareholders may be held liable to a limited extent for the company’s unpaid public debts. The minimum capital is TRY 50,000.
• Branch: Has no separate legal personality; the foreign company is directly liable for the branch’s debts.
• Liaison office: May only carry out market research, promotion and liaison activities, may not engage in commercial activity, and requires permission from the Ministry.

The minimum capital amounts apply to companies incorporated on or after 1 January 2024. Structures that aim to raise investment or go public in the future usually choose the joint stock company.

Before Incorporation: Documents

Documents coming from abroad are what most often delay incorporation, so preparation should start early:

• Corporate shareholders: A current certificate showing the company’s registration and representatives in its home country, and a board resolution approving the investment in the Turkish company.
• Individual shareholders and directors: A copy of their passport.
• Legalisation and translation: Documents issued abroad must bear an apostille (or consular legalisation in countries not party to the Hague Convention) and must be translated into Turkish by a sworn translator and notarised.
• Tax number: Foreign shareholders and directors obtain a Turkish tax identification number.
• Power of attorney and signature declaration: To complete incorporation without travelling to Turkey, a power of attorney is granted to a local representative, and signature declarations are prepared for those who will represent the company.

Incorporation Steps

1. Articles of association: The articles, covering the trade name, business purpose, registered address, capital and management structure, are prepared through the Ministry of Trade’s MERSİS system.
2. Capital: In a joint stock company, at least twenty-five per cent of the nominal value of shares subscribed in cash is deposited with a bank before registration, and the balance is paid within twenty-four months of registration. In a limited liability company, the share capital may be paid within twenty-four months of registration. The Competition Authority contribution of four per ten thousand of the capital is also paid at incorporation.
3. Registration: The founders or their attorneys sign the articles at the trade registry office and the company is registered. The company acquires legal personality on the date of registration, and the incorporation is published in the Turkish Trade Registry Gazette.

Once all documents are ready, registration is usually completed within a few business days.

After Incorporation

• Tax and accounting: The tax office carries out a workplace inspection, and statutory books and accounting are set up.
• Bank account: For companies with foreign shareholders, banks request detailed documents on the shareholding structure and ultimate beneficial owners; allow time for this.
• Employees: If employees will be hired, a social security workplace registration is made. Foreign directors and employees who will actually work in Turkey need a work permit.
• Foreign investment reporting: Companies with foreign capital regularly report their capital and activity information to the Ministry of Industry and Technology under the Foreign Direct Investment Law.
• Personal data: The company is subject to the KVKK from the moment it starts processing personal data; depending on its number of employees and balance sheet size, it may also have to register with the Data Controllers’ Registry (VERBİS).
• Shareholders’ agreement: Where the company is set up with a local partner, regulate the sharing of management, share transfer restrictions and exit rules in a shareholders’ agreement at the incorporation stage.