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This guide is about setting up a company in Turkey. It covers the process of setting them up, and information about shareholders and directors.
Turkey is one of the least complicated places - and one of the quickest - to set up a company.
In 2016, 66,000 new companies were registered in the company registers of Turkey. Of these, 4,729 were wholly or partly foreign owned: 1,500 Syrian, 330 German, and 304 Iraqi.
Some 12,000 companies were closed.
Many local people set up the company themselves but, of course, most of them are set up by local Turks who speak Turkish. As a foreigner, you will probably need some professional assistance but - unlike in some countries - the cost is modest. See below.
A limited company is a legal structure which has two key components. It has what is known as ‘legal personality’ and it offers ‘limited liability’.
Legal personality means that it is an entity distinct from the people who created it. It can, for example, enter into contracts in its own name and be responsible for its own actions. If it does something wrong it is the company that will be punished, not the shareholders - unless, of course, they have wilfully engineered it doing something wrong.
Limited liability means that, if the company goes bankrupt, its shareholders - unless (again) they have done something that the law sees as being wrong - will not have to pay its debts. Their liability is limited to the initial investment that they made in the company.
This does not mean that people running companies in Turkey have no responsibilities or liabilities. The directors of those companies have certain obligations. These vary a bit depending upon whether the company is a private limited company or a public limited company.
In this respect, Turkey is like most countries in the world.
These advantages are the reasons why many new businesses are set up as limited companies rather than in the form of alternatives such as partnerships or sole traders - neither of which enjoy these benefits.
This is pretty simple but, of course, it's all going to be done in Turkish. For most foreigners, therefore, this will all be done by their professional advisers - typically their accountant or their lawyer.
Companies are registered nationally, so only one company with a particular name can operate in Turkey.
Certain words can’t be used in a company name in Turkey. For example, Türkiye, certain Turkish regional names and anything offensive or that would cause confusion. Your accountant will be able to advise.
Hardly surprisingly, after hundreds of years, many names are not available - particularly names that include common Turkish surnames or which are short and catchy. Once a name has been used, it cannot be reused.
Checking the availability of a name can be done by your accountant online in about three minutes, using the Mersis system.
If your chosen name is not available, you may be able to set up a company with a different name and operate the business through that company 'trading as' (say) Fantasy Fashions. That is permitted provided that people are not likely to confuse your new business with any existing business.
You may have noticed that many Turkish companies have extraordinarily long names. This is because, until recently, the name of a company had to include its main trading activities (John Smith Construction & Property Development Ltd).
Because of this regulation, and because people were often not quite sure about how the activities of their company might develop, they listed anything that the company might conceivably want to do in the future.
This requirement has now been removed.
This is also done online. It is free. Reserving the name means that it will not be allocated to anybody else within the next four days.
This is the set of rules that govern the conduct of the company: in essence, its constitution. The document sets out the aims of the company and what its powers are. For example, it might say that the purpose of the company is to be a builder of houses and that its powers include the power to employ people, the power to buy and own land, the power to operate bank accounts etc. It's an important document.
Unlike in some countries, where you can also produce a standard constitution online, in Turkey the constitution needs to be produced by and signed in front of a Notary. Of course, the Notary will use a computer-based bank of precedents or templates to produce the constitution but at least he will have to make sure that it contains the powers that you require.
These standard forms often have optional sections.
Constitutions tend to be lengthy and contain all sorts of powers that you are unlikely ever to use but putting them in at the outset is a lot cheaper than adding them later.
If you only want to set up a simple company, you can go directly to a Notary, who will prepare the Articles of Association on your behalf. If the company is more complex or (as is often the case) you’re not quite sure what powers you need to include, you should go to a lawyer.
This must also be done in front of the Notary.
The constitution can be signed by someone having a Power of Attorney on your behalf. This could well be your lawyer or accountant.
They will put the details in the Mersis system and publish its existence in the official trade registry publication (the gazete).
That's it. Job done!
At the same time as you file your articles of association you will have to file a statement saying who are to be the directors of the company. They will usually be named in the Articles of Association.
Except in the case of a unipersonal company (see above) Turkish law requires that there should be two directors of a limited company.
They must be over 18. They can be of any nationality. At least one must live in Turkey.
The list of directors must show their full names, addresses and identity document numbers.
If the directors are not resident in Turkey they must nominate a contact address in Turkey and a responsible person in Turkey to receive documentation on their behalf. This will typically be their lawyer of accountant.
The duty of the directors is to manage the company prudently on behalf of its shareholders. If they do this, they will not have any personal liability if the company goes bust but if they are reckless in the way in which they control the company or if they do not comply with certain aspects of Turkish law they can be held personally responsible for their actions and for the debts of the company.
At the same time as you file your constitution you must file a statement saying who are to be the shareholders of the company. The initial shareholders will also be named in the constitution.
Except in the case of a unipersonal company (where, as the name suggests, only one shareholder is needed or indeed possible) Turkish law requires that there should be at least two shareholders in a company.
Shareholders can be either individuals or other companies.
If they are individuals, they must be over 18. They can be of any nationality. They do not need to live in Turkey. They may be (and - in small companies - commonly are) the same people as the directors.
The list of shareholders must show their full names, addresses and identity document numbers.
As already indicated, setting up a company in Turkey is straightforward but it is almost certainly something about which you will need to take professional advice.
Both accountants and lawyers are accustomed to dealing with this type of work. Which to choose will be, as much as anything else, a matter of personal convenience. If you are going to need the ongoing services of an accountant, it could be a good idea to get them to set up the company. If you are already using the services of a lawyer (for example, in connection with an application for immigration) it might make sense to have the lawyer set up the company.
Whoever you choose to do the work, it's important that they should not only go through the technical process of setting up the company but also advise you about whether a limited company best suits your needs (or whether you might be better off trading as a sole trader or in a partnership) and - if a company is your best choice - the best type of company for you and how best to structure it. This broader advice will involve an additional fee.
|Turkey Country Guide
Essential facts and figures about Turkey
|Starting a Business in Turkey
How to set up a Turkish business
I hope you have found this guide useful. If you need any further help, please contact me.Başak Yıldız Orkun 27 June 2017
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