Incorporation in Turkey
Capital companies are the most common form of business entities in Turkey utilized by both local and foreign investors, and are therefore the go-to option for incorporation in Turkey. Investors may choose to participate into an already existing capital company or incorporate a new one. 100% ownership of Turkish corporate entities by foreign (non-resident) companies and/or foreigner individuals is permitted, allowing a low barrier of entry for incorporation. Under Turkish law, both joint stock corporations (similar to ‘Corporations’ in the U.S. and ‘Société Anonyme’ in Europe) (‘Anonim Şirket’ – AS in Turkey) and limited liability companies (similar to ‘LLC’ or ‘LLP’s around the world) (‘Limited Şirket’ – LTD in Turkey) are capital companies, as opposed to so-called “personal companies” used for individual service providing.
In principle the liability of shareholders is limited with the share capital subscribed for both types of capital companies (AS and LTD). Company type, fields of activity, operations, and other corporate matters are governed by their Articles of Association (AoA – similar to ‘certificate of incorporation’ and ‘bylaws’ in other jurisdictions) within the framework set out in the law. From a practical point of view, Joint Stock Companies – AS’s are legal entities are better developed and more flexible. On the other hand, Limited Liable Companies – LTD’s are generally used for projects and investments in a smaller scale.
Incorporation Procedures and Time Costs
The procedures for company formations are generally quite complex, involving many steps and required documents, and it is generally advised to obtain assistance from experts during the incorporation process to avoid any possible issues. The complexities arise from the different types of documents required from foreign investors, and the procedures are even more complex if the investor is a foreign company. Some of the documents need to be obtained from abroad with apostille verification and there are also certain notarization requirements for certain documents. The trade registry online system (where the initial application for company formation is made) can also be confusing to inexperienced applicants, especially foreigners. Once the relevant documents are drafted and gathered, the procedure for incorporation takes less than 2 (two) weeks following the submission of documentation for both types of capital companies including tax registration (however, due to Covid-19 pandemic, the processing time may increase significantly). Please refer to our published article for detailed information regarding incorporation in Turkey here (also available via Mondaq)