Establishing a Company in Turkey is a rising demand over the last years. Turkey is a country with a rapidly growing economy and a strategic location that makes it an attractive destination for business ventures. However, establishing a company in Turkey requires careful consideration of the legal and regulatory requirements. In this article, we will explore the key points to remember when establishing a company in Turkey, including the different business structures available, the required documents for company registration, the process of company establishment, and the services provided by Han & Partners Law Firm for company establishment in Turkey.
Who We Are: Our Role in Your Journey
At Han & Partners Law Firm, we understand the complexities of establishing a company in Turkey. Our team of experienced lawyers specializes in providing comprehensive legal services to help you navigate the legal landscape and ensure a smooth establishment process. We are committed to assisting you at every step of your journey, from choosing the ideal business structure to acquiring the necessary licenses and permits. With our expertise and knowledge of Turkish laws and regulations, we can guide you through the entire process and help you establish your company in Turkey successfully.
Setting the Stage: An Overview
Before diving into the legal aspects of establishing a company in Turkey, it is important to have a general understanding of the country’s business environment. Turkey is a thriving market with a population of over 80 million people and a growing middle class. The country has a strong infrastructure, a skilled workforce, and a strategic location that serves as a bridge between Europe, Asia, and the Middle East. These factors make Turkey an attractive destination for businesses looking to expand their operations or enter new markets.
Deciphering the Legal Landscape in Turkey
Understanding the legal landscape is crucial when establishing a company in Turkey. The legal framework for company establishment is primarily governed by the Turkish Commercial Code (TCC) and the Foreign Direct Investment Law. These laws outline the requirements and procedures for establishing and operating a company in Turkey.
Choosing the Ideal Business Structure
When establishing a company in Turkey, one of the first decisions you need to make is choosing the ideal business structure. The most common types of business structures in Turkey are Sole Proprietorship, Limited Liability Company (LLC), Joint-Stock Company (JSC), and Branches & Representative Offices of International Companies. Each structure has its own advantages and disadvantages, and the choice depends on various factors such as the nature of your business, the level of liability you are comfortable with, and the capital requirements.
Sole Proprietorship
Sole Proprietorship is the simplest and most common form of business structure in Turkey. It is suitable for small businesses and individual entrepreneurs who want to have full control over their business. In a sole proprietorship, the owner is personally liable for all debts and obligations of the business. This means that your personal assets may be at risk if the business fails or faces financial difficulties.
Limited Liability Company (LLC)
A Limited Liability Company (LLC) is a popular choice for small and medium-sized enterprises (SMEs) in Turkey. It offers limited liability protection to its shareholders, which means that their personal assets are separate from the company’s assets. This structure provides a degree of protection for shareholders against the company’s debts and obligations. An LLC can be established with a minimum of one shareholder and one director, who can be a foreign national or a Turkish resident.
Joint-Stock Company (JSC)
A Joint-Stock Company (JSC) is suitable for larger businesses that plan to raise capital through public offerings or have a complex ownership structure. A JSC can have multiple shareholders, and its shares can be traded on the stock exchange. This structure offers limited liability protection to shareholders and provides a more flexible ownership and management structure compared to an LLC. However, establishing a JSC requires a higher minimum capital requirement and more complex legal procedures.
Branches & Representative Offices of International Companies
International companies can establish branches or representative offices in Turkey to expand their operations or enter the Turkish market. A branch is considered an extension of the parent company and has the same legal entity. On the other hand, a representative office is a non-profit entity that can only engage in limited activities such as market research and promotion.
Establishing a branch or representative office requires approval from the Ministry of Trade and other relevant authorities.
Company Capital in Turkey
Company capital refers to the financial resources contributed by the shareholders of a company. In Turkey, the minimum capital requirements vary depending on the type of business structure. For an LLC, the minimum capital requirement is 10,000 Turkish Lira (TRY). However, there are no minimum capital requirements for a sole proprietorship. For a JSC, the minimum capital requirement is 50,000 TRY, and it must be fully paid up before the establishment of the company. The capital can be contributed in cash, in-kind contributions such as property or equipment, or a combination of both.
To register a company in Turkey, certain documents and information are required. These include:
- Articles of Association: The Articles of Association outline the company’s purpose, structure, and rules of operation. It must be prepared in accordance with the Turkish Commercial Code and notarized.
- Passport Copies: Passport copies of the shareholders and directors are required for company registration. If the shareholders or directors are Turkish nationals, their Turkish Identification Numbers are also required.
- Residence Permits: Foreign shareholders and directors must have a valid residence permit in Turkey.
- Company Address: A physical address in Turkey is required for company registration. This can be a rented office space or a virtual office.
- Tax Identification Number: Each shareholder and director must have a tax identification number in Turkey.
- Bank Account: A bank account in Turkey is required for the capital contribution and future business transactions.
- Power of Attorney: If the shareholders or directors cannot be physically present during the registration process, a power of attorney authorizing a representative to act on their behalf is required.
- Trade Name Approval: The proposed trade name of the company must be approved by the Trade Registry Office.
Step by Step Company Establishment in Turkey
The process of company establishment in Turkey involves several steps and can be completed within a few weeks. The main steps include:
- Trade Name Reservation: The first step is to reserve the trade name of the company with the Trade Registry Office. The proposed trade name should not be identical or similar to any existing company names.
- Preparation of Documents: Once the trade name is reserved, the necessary documents such as the Articles of Association, passport copies, and other required documents must be prepared.
- Notarization and Translation: The prepared documents must be notarized and translated into Turkish by a sworn translator.
- Company Registration: The notarized and translated documents, along with the application form, must be submitted to the Trade Registry Office for company registration.
- Tax Registration: After the company is registered, it must obtain a tax identification number and register with the tax authorities.
- Social Security Registration: The company must also register with the Social Security Institution (SSI) to fulfill its social security obligations.
- Acquiring Licenses and Permits: Depending on the nature of the business, certain licenses and permits may be required from relevant authorities.
- Setting Up a Bank Account: A bank account must be opened in the name of the company and the capital contribution must be deposited.
Acquiring Required Licenses and Permits
Depending on the nature of your business, you may need to obtain additional licenses and permits from relevant authorities. These licenses and permits vary depending on the industry and can include construction permits, environmental permits, health and safety permits, and professional licenses. It is important to consult with a legal expert to ensure compliance with all legal requirements.
Setting Up a Bank Account in Turkey
Opening a bank account in Turkey is a crucial step in the company establishment process. A bank account is required for the capital contribution and future business transactions. To open a bank account, the company must provide the necessary documents such as the company registration documents, Articles of Association, passport copies of the shareholders and directors, and tax identification numbers. It is advisable to choose a bank that offers services in English and has a good reputation for customer service.
Social Security and Tax Registration
After the company is registered, it must obtain a tax identification number and register with the tax authorities. The tax identification number is required for various tax-related transactions such as invoicing, payroll, and tax returns. The company must also register with the Social Security Institution (SSI) to fulfill its social security obligations. The SSI registration is necessary to provide social security coverage for the company’s employees and to ensure compliance with the labor laws.
The Labor Laws: What You Need to Know
Understanding the labor laws is essential when establishing a company in Turkey. The labor laws regulate the relationship between employers and employees and cover various aspects such as working hours, annual leave, termination of employment, and social security contributions. It is important to comply with these laws to avoid legal disputes and financial penalties. Consulting with a legal expert can help you navigate the labor laws and ensure compliance with all legal requirements.
Shareholding in Turkish Companies
Shareholding in Turkish companies is governed by the Turkish Commercial Code and the company’s Articles of Association. Shareholders are the owners of the company and have certain rights and responsibilities. The ownership structure and the rights and obligations of shareholders are determined by the Articles of Association. Shareholders can be individuals or legal entities, and they can hold different classes of shares with varying voting rights and dividend entitlements. It is important to carefully consider the shareholding structure and the rights and obligations of shareholders when establishing a company in Turkey.
Understanding Shareholders in Turkey
Shareholders in Turkish companies have certain rights and responsibilities. These include the right to attend and vote at general assemblies, the right to receive dividends, the right to inspect company records, and the right to transfer shares. Shareholders also have certain responsibilities such as contributing to the company’s capital, complying with the Articles of Association, and fulfilling their financial obligations. The rights and responsibilities of shareholders are determined by the company’s Articles of Association and the Turkish Commercial Code.
Restrictions or Requirements for Directors Appointment
The appointment of directors in Turkish companies is subject to certain restrictions and requirements. The directors must be individuals and can be Turkish nationals or foreign nationals. However, at least one director of an LLC must be a Turkish resident. The directors must meet certain qualifications such as being of legal age and having full legal capacity. In addition, directors must have a clean criminal record and cannot be declared bankrupt or prohibited from performing commercial activities. It is important to comply with these requirements when appointing directors to avoid legal complications.
Legal Requirements for Company Board Composition
The composition of the company’s board is an important aspect of corporate governance. The board of directors is responsible for managing the company’s affairs and making important decisions. In Turkey, the board of directors must have at least one member for an LLC and three members for a JSC. The board members can be shareholders or non-shareholders, but at least one member must be a Turkish resident. The board members are appointed by the general assembly of shareholders and have certain rights and responsibilities.
Structure
The structure of the company’s board is determined by the Articles of Association. The board can have a single-tier structure, where all board members have the same rights and responsibilities, or a two-tier structure, where there is a separation between the management board and the supervisory board. The two-tier structure is more common in larger companies and provides a system of checks and balances.
Board Size
The size of the board is determined by the company’s Articles of Association. The number of board members can vary depending on the size and complexity of the company’s operations. It is important to strike a balance between having a sufficient number of board members to ensure effective decision-making and avoiding an excessively large board that may hinder decision-making.
Employee Representation
In certain cases, Turkish law requires employee representation on the company’s board. This requirement applies to companies with 50 or more employees. The employees elect their representatives, who have the right to attend board meetings, express their opinions, and participate in the decision-making process. Employee representation aims to ensure that the interests of the employees are taken into account in the company’s decision-making process.
Our Services at Han & Partners Law Firm for Company Establishment in Turkey
At Han & Partners Law Firm, we offer a wide range of services to assist you in establishing your company in Turkey. Our services include:
- Legal Consultation: We provide legal consultation to help you understand the legal requirements and procedures for company establishment in Turkey. Our team of experienced lawyers can answer your questions and provide guidance throughout the process.
- Company Formation: We assist you in choosing the ideal business structure, preparing the necessary documents, and completing the company registration process. We ensure compliance with all legal requirements and handle the paperwork on your behalf.
- Licensing and Permits: We help you identify the licenses and permits required for your business and guide you through the application process. We ensure that all necessary licenses and permits are obtained to ensure the smooth operation of your company.
- Bank Account Setup: We assist you in opening a bank account in Turkey and guide you through the process of depositing the capital contribution. We help you choose a bank that suits your needs and ensure that all necessary documents are provided.
- Tax and Social Security Registration: We handle the tax and social security registration process on your behalf. We ensure that your company is registered with the tax authorities and the Social Security Institution (SSI) and that all necessary tax and social security obligations are fulfilled.
- Labor Law Compliance: We provide guidance on the labor laws in Turkey and help you comply with all legal requirements. We ensure that your employment contracts, working hours, and social security contributions are in line with the labor laws.
Frequently Asked Questions About Establishing a Company in Turkey
What is the Cost of Starting a Company in Turkey?
The cost of starting a company in Turkey depends on various factors such as the type of business structure, the capital requirements, and the services required. It is advisable to consult with a legal expert to get an accurate estimate of the costs involved.
Should I Use a Company Formation Service?
Using a company formation service can simplify the process of establishing a company in Turkey. Navigating the intricacies of company registration in Turkey need not be overwhelming. Every document must be translated into Turkish and duly notarized, a task that demands precision. In Turkey, information processing is comprehensive and requires keen attention to detail.
You don’t have to face these complexities alone. Our law firm is ready to guide you every step of the way. Our lawyers, specialists in company establishment, can clarify the company registration timeline and each stage of the process. We’re not just advisors, we’re your partners, committed to helping you choose the most suitable company type for registration, and providing steadfast legal support throughout your company’s establishment. For a smooth, stress-free experience in setting up your business in Turkey, get in touch with our expert team today.
