Incentives Applied to Investors in Türkiye
Turkish corporate law has undergone changes with the accession negotiations with the European Union.
This change has brought about many new developments, such as preferential treatment for foreign investors and a reduction in bureaucracy in company establishment.
1-General
Investments in foreign companies are regulated by the law called the "Law on Direct Investments of Foreign Entrepreneurs."
The law provides equal rights to Turkish and foreign entrepreneurs. Regardless of whether they are Turkish citizens or of foreign origin, they will benefit from the same rights. This allows foreign entrepreneurs to benefit from the Investment Incentive Program.
Of course, foreign entrepreneurs can establish companies and operate as entrepreneurs in Türkiye.
2. Turkish Commercial Law
The Turkish Commercial Code ("Commercial Code") regulates the establishment of limited liability companies ("Ltd."), joint stock companies ("AktG"), limited partnerships, and ordinary partnerships. However, most entrepreneurs prefer GmbH or AktG due to their practicality and ease of share transfer.
According to the Commercial Code, board members are not required to attend the general assembly meeting. Members can participate in the general assembly meeting via online conferences. This reduces travel costs.
On the other hand, the Commercial Code has adopted the registered capital system, which allows for flexible capital increases for non-public companies. This reduces bureaucratic and travel costs during capital increases.
Furthermore, legal entities can also become board members. This means that the general assembly does not need to appoint members to replace the board of directors. This means that foreign entrepreneurs can effectively replace the board of directors.
3. Joint Stock Companies and Limited Liability Companies
According to the Commercial Code, both companies (AktG) and GmbHs (limited liability companies) can be established by only one partner. A comparison of the two companies reveals that they have different capital systems, management systems, and decision-making processes. For clarity, we would like to summarize the differences between the two companies:
4. Regarding Joint Stock Companies (excluding public companies)
Joint stock companies (AKTG) must have a capital of at least €50,000 and one partner.
However, the Joint Stock Companies Law (AKTG) does not require a director to be a shareholder; this applies to a GmbH (limited liability company).
The Joint Stock Companies Law does not require all decisions, except for changes in headquarters and title, to be made by the general assembly. These decisions must be made solely by the company's general assembly.
The transfer of shares does not require notary approval. Simply recording the transfer in the share register is sufficient.
Some sectors require the approval of the Ministry of Industry and Trade. These sectors include banking, insurance, leasing, factoring, exchange offices, public warehouses, free trade zone managers and operators, and companies subject to capital market legislation.
5. About Limited Liability Companies
LLCs must have a minimum capital of 10,000 Turkish Lira and one partner.
According to Article 623, Paragraph 1, at least one manager must be a partner of the LLC. A foreign entrepreneur can be both a manager and a partner simultaneously.
Furthermore, all decisions must be made by the LLC's general assembly.
The transfer of shares must be regulated in the articles of association. Otherwise, the partners must obtain the approval of the other partners. Furthermore, the transfer must be notarized.
6. Conclusion
Foreigners can establish a company by investing their capital in Türkiye. All laws regulating investment are valid. The preferential treatment granted to Turkish entrepreneurs also applies to foreign entrepreneurs. In this context, the growth of the Turkish economy and the Turkish sociocultural structure must be taken into account. If you have all the necessary documents, you can establish a company within a few days.
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Lawyer Dr. Anıl Coşkun, LL.M.
www.anil-coskun.com
info@anil-coskun.com
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