Starting a business in Turkey should be what every investor should be considering. The country has settled everything in place to enhance whatever industries you want to establish in the country.
The country is one of the favorite places on earth for your business. Besides, the country remains one of the fewest countries in the world where you can complete all legal documentation and establishment of your Company within a week.
Moreover, the country is recorded to be one of the nations with the fastest growing economy, high supply of labor force, and Turkey is also the energy channel between Asia and Europe.
Starting a business in Turkey is a natural process when you have equipped yourself with the right information. And as a matter of fact, the country has given the Trade Registry Offices located in the Chambers of Commerce to be the only office to start and complete the whole establishment procedure.
Below are all you need to know about how to set up your Company in Turkey;
1. Type of Company according to TCC and alternatives form.
According to Turkish Commercial Codes (TCC), there are five types of Company in Turkey which are;
- Ordinary partnership.
- Collective company.
- Commanded company.
- Limited liability company.
- Joint-stock company.
The first three companies are not familiar in the country, but most companies in Turkey falls under the last two categories. Let’s briefly explain Limited Liability and Joint-stock company.
– Limited liability company.
This type of company is the one in which is formed by two or more people (maximum of 50 people) with fixed Capital, a cooperate business name, and with liability limited to the cooperate assets. The liability of shareholders lies with the company which is determined by the individual share of the Capital.
– Joint-stock company.
A Joint-stock company is the one with a cooperate title, and it’s Capital is divided into shares. It is also responsible for taking up its debt but only to the maximum of its estate. The liability of shareholders of the company is limited to shares of the capital contributed by them.
Knowing the type of company, you intended to set in Turkey will greatly help in the establishment. And also ease your registration process by understanding the necessary documents to have with you.
2. Online submission of memorandum to MERSIS.
As for Joint Stock Company, the memorandum or book of contract is called the Article of Association (AOA). This book must contain; the cooperate title and the headquarter address of the company, its aim, and objectives, the value of the Capital, share allocation, and number of shares, special advantages to the shareholders if any exist, rules and regulation guiding the company, and duration of the company.
The same content must be in the area of the LLC, and it must be submitted online by foreign investors to the MERSIS. The MERSIS is a system that is used in Turkey to store commercial registry entries, and performing commercial registry activities electronically regularly. On submission of this document to the MERSIS, the Company has gained the freedom to operate within the system.
3. Notarization and Execution of documents.
The next thing is to proceed to the Trade Registry Office for the witnessing of the signatory of the shareholders in the company as a member of the notary public. But to do so, the company has to compile the following documents;
- Articles of incorporation to be signed by all founders of the company before the Trade Registry employee.
- The National identity card of the Company’s management.
- Signature declaration to be notarized.
- Two copies of passports for each shareholder, as long as they are real person shareholders.
- If any of the foreign partners is a legal practitioner, he or she must come with the Certificate of Activity as a legal entity. And a copy of power of attorney granting the attorney the permission to proceed with the application.
Note that all the documents above, and others to be brought from foreign countries for the establishment of a company must be notarized at the Turkey Registry Office.
4. Secure a tax identification number for the shareholders of the potential company.
It also essential to obtain a potential tax identification number for the foreign shareholders and non-Turkish board members of the company. The identification numbers to be collected from the relative tax office is the major requirement for opening a bank account to deposit the company capital.
5. Depositing a fixed amount of the company capital to the competition authority.
An equivalent amount to 0.04% of the company start-up capital must be deposited at the competition authority through the Trade Registry Office in the Chambers of Commerce.
6. Depositing some percentage of the company capital in the company bank account.
At this stage, the company is assumed to have opened a bank account by using tax iD number of all the shareholders. Then the foreign investors are to deposit 25 percent of the company capital into the bank account, and the proof of deposition must be submitted at the Trade Registry Office. The remaining 74% must be paid within the first year of registration or together with the 25% during registration.
However, the compulsory 25% deposition does not necessarily apply to Limited liability Company, but all capital must be paid in within 24months after registration of the Company.
7. Registration at the Trade Registry Office.
All the previous procedure falls under the pre-registration category, i.e. getting the necessary documents for registration. After getting the requirements, the Company is to apply for registration at the Trade Registry Office, and at this stage, it is expected of them to submit the following documents;
- The formal request for registration.
- Four copies of the incorporation notification form.
- Signed and notarized articles of incorporation.
- Evidence of deposition to the company’s bank account.
- Evidence of deposition to the competition authority.
- Two copies each of signatory declaration for all the founders.
- Filled shareholders form issued by the Trade Registry office. The shareholder form is of two types, one is for real entity shareholder, and the other is for legal entity shareholder.
- An expert report concerning the capital in kind.
- A written agreement between the founders, company, and other stakeholders in the company regarding the establishment of the company.
After submission of the documents and acceptance by the Trade Registry Office. Then the Office notifies another body in charge of registration of the company in Turkey to solidify and make known the Company’s registration to other arms. The Office sees to it that the establishment of the company is announced in the Commercial Registry Gazette between 10days of registration. It also makes known of the company’s registration to the relevant tax office, and social security institution to create the Social security number for the company.
8. Certification of legal books.
After registration, it is expected of the Trade Registry Office personal to certify the following book;
- Inventory book.
- General assembly meeting minutes book.
- Manager’s minute book.
9. Companies follow up.
Having notified other bodies in charge, the newly registered prepares for the visit of the notified bodies to the company premises for supervision. For example, the tax office is to come to the company’s headquarter to prepare the determination report.
10. Insurance of signature circular.
The signature circular containing the signature of all the company’s signatory is submitted to the Trade Registry Office.
Registering the Company Branch Office
A branch office in Turkey is that which has no shareholder and stand to fulfill the same purpose as the parent company in the country. The branch office requires no capital to set up, but it is advisable that the parent company set up a budget to feed it to her independent stage.
To register a branch office in Turkey the following document must be submitted at the point of application in the Trade Registry Office.
- A petition requesting registration (This petition is to be signed by an authorized company signatory or a representative).
- The statement of intent of the concerned body in the parent company to have a branch office.
- A document that serves as evidence of registration of the parent company and the current status of the company.
- The power of attorney issued by the parent company.
- 5 copies of filled and signed branch establishment declaration form.
- A copy of the passport of the branch proxy if he/she is a foreigner, but a Turkish citizen can make use of his/her identification card.
- Two copies of the signature declaration of the representative of the branch.
- A commitment letters.
- Chamber Registry declaration form statement issued by the Trade Registry Office attached with a passport photograph of the branch representative.
Registering A Liaison Office in Turkey
A liaison officer is a business place that acts as a communication link between the parent company or head office, and the people they are offering their service to in a particular place but not involving directly or indirectly in any trading, commercial or industrial activity.
The main purpose of a liaison office in a place to study the attitude of residence in the area to the services or product marketed by the Company, and also to advertise the product to people. A liaison office can also promote import and export, but they are forbidden to engage in commercial activities.
The following documents are required to register a liaison office in Turkey, and they are to be submitted to the Office of General Directorate of incentive implementation and Foreign investment (GDIIFI), Ministry of Trade.
- Application form.
- A written material stating the mission of the liaison office, and an undertaking that the office will not engage in any trading activities in the country, and evidence that the liaison office is fully approved by the parent Company.
- A certificate of operation issued to foreign companies or balance sheet.
- A certificate of authorization issued to the individuals appointed to conduct the activities of the liaison office.
- A power of attorney in the event that the procedures for establishing the liaison office are carried out by another representative.