Company Establishment in Turkey for Foreign Investors

Introduction

The primary legal framework regulating the commercial activities and company establishment procedures of foreign investors in Turkey is Law No. 4875 on “Foreign Direct Investment.” In addition, the Turkish Commercial Code (TCC), the Turkish Code of Obligations (TCO), Law No. 4817 on Work Permits for Foreigners, and the Regulation on the Implementation of Law No. 4875 provide additional substantive rules applicable to this subject.

Foreign natural and legal persons are free to undertake small, medium, or large-scale investments in Turkey without limitation as to the type of company form to be used. The critical considerations are the selection of the appropriate type of company for the intended activities and the preparation of the company’s articles of association.

Analysis

For a foreign individual intending to establish a company in Turkey, the initial requirements are limited to a notarially certified translation of the passport and obtaining a foreign tax identification number. A point of particular importance during the application for a tax number is the declaration of a residential address on the application form. Should a residential address in Turkey be provided, the person is required to possess a residence or work permit during the company establishment phase via the MERSİS system (Central Registration System). Conversely, if a foreign address is provided, company establishment can be completed without the need to submit additional documentation.

Once the foreign tax number is obtained and the passport is recorded, the individual must request a system registration through MERSİS. Following the MERSİS registration, the articles of association must be duly registered. The foreign natural person may be appointed as the sole shareholder or as a manager. Thereafter, the registration process with the Trade Registry commences. Should the foreign individual not speak Turkish, the presence of a sworn translator is mandatory during the signature phase.

Evaluation

No distinction is made between domestic and foreign investors with respect to procedures for company establishment and investment. Obligations imposed upon domestic investors apply equally to foreign investors. The two principal requirements mandatory for a foreign natural person to incorporate a company in Turkey, both of which can be satisfied with relative ease, are: (i) a notarially certified translated passport, and (ii) a tax identification number. Additionally, particular care should be taken with respect to the drafting of the company’s articles of association. It is highly advisable that the articles of association be prepared by a qualified lawyer, as this document forms the legal underpinning of the company and is critical in the prevention of potential loss of rights in the future.