Can a Foreigner Register a Business in Türkiye?
One of the most important directions of the economic policy of any country, including Türkiye, is to attract foreign investors. Türkiye is the best option for investors not only due to its favourable geographical location, promising market, developed industry and infrastructure, but also the ease of setting up and doing business, subject to compliance with the requirements of local legislation. The Foreign Direct Investment Law No. 4875 dated 05.06.2003 (Doğrudan Yabancı Yatırımlar Kanunu) is the basic legal act regulating foreign investments in Türkiye. The law does not differentiate between Turkish entrepreneurs and foreign investors. Article 3 of the Law states, inter alia, that unless otherwise provided by international agreements and other special norms and regulations, foreign investors have the right to freely conduct investment activities in Türkiye and establish commercial entities. Foreign investors are also entitled to equal treatment along with local entrepreneurs.
Foreign persons can either open branches and representative offices or set up a separate company. The system of organizational and legal forms used in Turkey is reflected in the Turkish Commercial Code No. 6102 (Türk Ticaret Kanunu). The most common forms are a joint-stock company (anonim şirketi, abbreviated as A.Ş.) and a limited liability company (limited şirketi, abbreviated as Ltd. Şti.). Even though the registration procedure and the maintenance of these forms are similar, there are some differences, namely:
- The shareholders in a joint-stock company are liable only to the extent of the value of the company’s shares owned by them; whereas the shareholders of a limited liability company are jointly liable for the payment of the due debts owed to the government with their personal assets proportional to their shares.
- The minimum amount of the principal capital of a joint-stock company is 50.000 Turkish liras, 25% of which must be paid prior to the registration of the company. The minimum amount of the principal capital of a limited liability company is 10.000 Turkish liras and there is no need to deposit any amount prior to registration. The amount of the authorized capital is paid within 24 months from the date of registration of the company.
- The joint-stock company’s share transfer is carried out by concuding and signing a share transfer agreement; when it comes to the limited liability company’s shares, the share transfer agreement must be certified by a notary and registered in the commercial register.
- A limited liability company may not engage in certain types of business activities, such as: banking, insurance, foreign exchange and other fields stipulated by the law.