Are you considering business expansion into Turkey in 2025? Establishing a company in Turkey with a foreign legal entity shareholder has become increasingly streamlined, offering numerous opportunities for international businesses seeking to expand their operations.
Having a foreign company as a shareholder offers unique advantages for global enterprises aiming to leverage Turkey’s strategic position between Europe and Asia. Foreign legal entity shareholders can fully own or co-own Turkish companies, guaranteeing seamless entry, robust legal protection, and access to a dynamic market.
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Why Form a Turkish Company with a Foreign Legal Entity Partner?
- 100% Foreign Ownership: Turkish regulations permit full foreign ownership. Your company can be the sole shareholder of a Turkish entity.
- Equal Legal Treatment: Foreign legal entity shareholders enjoy the same rights and protections as Turkish nationals.
- Diverse Structures: Options include Limited Liability Company (LLC), Joint-Stock Company (JSC), branch, or liaison office, each suited to different investment goals.
The Appeal of Turkey for Foreign Investment
Turkey’s investment climate is increasingly attractive, thanks to its robust legal framework, talented workforce, and supportive government policies. The Turkish Commercial Code (TCC) aligns with international standards, providing a secure and transparent environment for businesses.
Foreign investors are treated equally to domestic investors, enjoying the same rights and obligations. This principle of “national treatment” is a cornerstone of Turkey’s foreign direct investment law, making it an appealing jurisdiction for global enterprises.
Choosing the Right Legal Structure for Your Turkish Company
When a foreign legal entity decides to establish a company in Turkey, selecting the appropriate legal structure is paramount. The two most common and favored types are the Limited Liability Company (Ltd. Şti.) and the Joint Stock Company (A.Ş.).
- Limited Liability Company (Ltd. Şti.): This is often preferred by foreign investors due to its simpler establishment process, lower capital requirement (minimum TRY 50,000), and flexible management structure. It’s ideal for small to medium-sized enterprises (SMEs) and offers limited liability to shareholders, capped at their capital contribution.
- Joint Stock Company (A.Ş.): More suitable for larger investments, public offerings, or companies requiring substantial capital (minimum TRY 250,000). A.Ş. companies offer greater flexibility in share transfers and can be more advantageous for businesses seeking to raise capital from public markets. They have a more formal governance structure.
The choice between these two depends on your business objectives, capital size, and long-term plans. Our experienced lawyers at Akkas & Associates can provide tailored advice on the most suitable structure for your specific needs.
Key Steps to Company Establishment with a Foreign Legal Entity Shareholder
The process involves several crucial stages, requiring meticulous preparation and adherence to Turkish legal requirements.
- Preparation of Required Documents from the Foreign Legal Entity: The foreign legal entity acting as a shareholder must prepare specific documents. These typically include:
- Certificate of Activity/Good Standing: Issued by the relevant authority in the foreign entity’s country of registration, confirming its active status and current signatories. This document must contain information about the legal entity’s current standing and authorization of signatories.
- Board Resolution: A formal resolution from the foreign legal entity’s competent corporate organ authorizing the establishment of the Turkish company and the appointment of an authorized representative to act on its behalf in Turkey. This resolution should clearly state the name of the prospective Turkish company and its field of activity.
- Power of Attorney (PoA): If the establishment process is managed by a representative in Turkey, a notarized and apostilled (or consulate-certified) PoA is essential.
- Notarized and Translated Passport Copies: For the authorized representative(s) of the foreign legal entity. All documents issued abroad must be duly apostilled or certified by the Turkish Consulate in the issuing country, then officially translated into Turkish and notarized in Turkey.
- Obtaining a Potential Tax Identification Number: Before formal registration, the foreign legal entity (through its authorized representative) must obtain a potential tax identification number from the Turkish tax authorities. This number is crucial for various stages of the company formation.
- Drafting and Notarizing the Articles of Association: The Articles of Association (Ana Sözleşme) are the foundational legal document of your Turkish company. It outlines the company’s name, purpose, registered address, capital structure, shareholders (including the foreign legal entity), management, and other essential details. This document must be prepared through the MERSIS (Central Registry System) and then notarized by a public notary in Turkey.
- Deposit of Share Capital and Competition Authority Fee: For Joint Stock Companies (A.Ş.), at least 25% of the subscribed capital must be deposited into a Turkish bank account before registration, with the remaining 75% payable within 24 months. For Limited Liability Companies (Ltd. Şti.), the full amount can be paid within 24 months. Additionally, a small percentage (0.04%) of the company’s share capital must be deposited with the Turkish Competition Authority.
- Registration with the Trade Registry Office and Post-Registration Formalities: Once all documents are prepared and the capital is deposited, the application for company registration is submitted to the relevant Trade Registry Office. Upon approval, the company gains legal personality. Following registration, crucial steps include:
- Obtaining the company’s tax registration certificate from the local tax office.
- Registering with the Social Security Institution (SGK) if employees will be hired.
- Certifying legal books with a notary public.
- Obtaining necessary licenses and permits relevant to the specific business activities.
- Opening a corporate bank account.
Navigating Turkish Regulations with Expert Legal Counsel
While the Turkish legal framework is designed to facilitate foreign investment, navigating the intricacies of company establishment can be complex. Understanding sector-specific regulations, tax obligations, and ongoing compliance requirements is vital for a smooth and successful operation.
For further insights into the legal aspects of doing business in Turkey, you may find our article on Turkish Corporate Law particularly helpful. We also recommend consulting our guide on Turkish Company Formation Procedures for a detailed breakdown. Additionally, for foreign individuals considering residency, our resource on Turkish Residence Permit for Foreigners provides valuable information.
FAQs: Establishing a Company in Turkey with a Foreign Legal Entity Shareholder
Q1: Can a foreign legal entity be the sole shareholder of a Turkish company? A1: Yes, Turkish law permits 100% foreign ownership of companies, whether the shareholder is a natural person or a legal entity.
Q2: Are there any specific industries restricted for foreign investment in Turkey? A2: While most sectors are open to foreign investment, some strategic sectors like defense, aviation, and broadcasting may have specific regulations, caps on foreign ownership, or require joint ventures with Turkish partners.
Q3: Is it mandatory for the foreign legal entity to have a physical presence in Turkey during the establishment process? A3: No, the establishment process can be completed through a duly authorized representative in Turkey via a Power of Attorney, meaning the foreign legal entity’s representatives do not need to be physically present.
Q4: What are the ongoing compliance requirements for a Turkish company with a foreign legal entity shareholder? A4: Ongoing compliance includes filing annual financial statements, submitting quarterly and annual tax returns, maintaining accurate accounting records, and registering any changes in company structure with the Trade Registry.
Q5: How long does the company establishment process typically take? A5: With all documents in order and efficient processing, the company establishment process can generally be completed within 3 to 7 business days. However, delays can occur if documents are incomplete or not properly apostilled/certified and translated.
Q6: Is a Turkish partner required for foreign investors? A6: No, Turkish law does not require foreign investors to have a Turkish partner for company establishment, except in certain regulated sectors.
Contact us for Establishing a Company in Turkey with a Foreign Legal Entity Shareholder
Establishing a company in Turkey with a foreign legal entity shareholder requires a clear understanding of the legal landscape and meticulous execution. Our dedicated team at Akkas & Associates Law Firm provides comprehensive legal services for company establishment in Turkey, ensuring a seamless and compliant process for our international clients.
If you are a foreign legal entity considering establishing a company in Turkey, or require assistance with Turkish company formation, foreign investment, or Turkish commercial law, please do not hesitate to contact Akkas & Associates Law Firm. Our Istanbul-based team is ready to assist you.
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