Turkey’s corporate law framework is built around the Turkish Commercial Code No. 6102, which entered into force in 2012 and brought Turkish commercial legislation into closer alignment with European Union standards and modern international business practices. The Code regulates the formation, governance, operation, and dissolution of all types of commercial companies, providing a comprehensive set of rules for both domestic and foreign investors seeking to establish a business presence in the country. With its strategic geographic position, large domestic market, and investor-friendly reforms, Turkey continues to attract significant commercial activity, making the understanding of its corporate legal infrastructure essential for any entrepreneur or entity considering entry into the Turkish market.
Foreign nationals and foreign legal entities are permitted to establish companies in Turkey under the same conditions as Turkish citizens, without any requirement for a residence permit or work permit. The formation process can be completed through a power of attorney without the foreign investor being physically present in the country. This equal treatment principle, enshrined in the Foreign Direct Investment Law No. 4875, has played a central role in encouraging international capital flows into Turkey’s economy.
Types of Commercial Companies Under Turkish Law
The Turkish Commercial Code recognizes five types of commercial companies, classified into two main categories: capital companies and partnerships. Capital companies include the joint-stock company, the limited liability company, and the commandite company divided into shares. Partnerships include the collective company and the ordinary commandite company. In addition, cooperatives are regulated under the Cooperatives Law No. 1163.
Article 124 of the Turkish Commercial Code: Commercial companies consist of collective companies, commandite companies, joint-stock companies, limited liability companies, and commandite companies divided into shares. Collective companies and commandite companies are classified as partnerships, while joint-stock companies, commandite companies divided into shares, and limited liability companies are classified as capital companies.
In practice, the vast majority of companies operating in Turkey are either limited liability companies or joint-stock companies. According to data from the Ministry of Trade, limited liability companies account for roughly eighty-five percent of all registered companies, while joint-stock companies represent approximately ten percent. The remaining share is distributed among cooperatives and the less commonly used partnership structures.
The Joint-Stock Company
The joint-stock company is the most suitable structure for large-scale commercial activities, external financing, and ventures aiming for public offering. Under Article 329 of the Turkish Commercial Code, a joint-stock company is defined as a company whose capital is determined and divided into shares, and which is liable for its debts solely with its own assets.
Article 329 of the Turkish Commercial Code: A joint-stock company is a company whose capital is fixed and divided into shares. The company is liable for its debts solely with its assets. The liability of the shareholders is limited to the capital contributions they have undertaken to provide to the company.
A joint-stock company may be established by one or more natural or legal persons. The minimum capital requirement is 250,000 Turkish liras for companies operating under the fixed capital system. For companies adopting the registered capital system, which allows the board of directors to increase the capital up to a predetermined ceiling without a general assembly resolution, the minimum initial capital is 500,000 Turkish liras. At least one-quarter of the subscribed capital in cash must be deposited in a bank account opened in the name of the company being formed prior to registration with the trade registry. The remaining balance must be paid within twenty-four months following the registration.
The mandatory governing bodies of a joint-stock company are the general assembly of shareholders and the board of directors. The general assembly is the supreme decision-making organ and convenes at least once a year to approve the financial statements, elect board members, and decide on fundamental corporate matters such as amendments to the articles of association, capital increases, and mergers. The board of directors is responsible for the management and representation of the company. Board members may be natural or legal persons, and there is no requirement for board members to be Turkish citizens or residents.
The Limited Liability Company
The limited liability company is the most widely used corporate form in Turkey, favored by small and medium-sized enterprises for its relatively simple formation process, lower capital requirements, and flexible management structure. Under Article 573 of the Turkish Commercial Code, a limited liability company is established by one or more natural or legal persons under a commercial title, with a fixed capital consisting of the aggregate of the capital shares.
Article 573 of the Turkish Commercial Code: A limited liability company is established by one or more natural or legal persons under a commercial title. The capital of the company is fixed and consists of the total of the capital shares. The shareholders are not personally liable for the debts of the company beyond their capital contributions.
The minimum capital requirement for a limited liability company is 50,000 Turkish liras. The maximum number of shareholders is limited to fifty, and the company may not offer its shares to the public. Share transfers in a limited liability company require a notarized share transfer agreement and, unless the articles of association provide otherwise, the approval of the general assembly by a majority of at least three-quarters of the votes represented. Each transfer must be registered with the trade registry and published in the Turkish Trade Registry Gazette.
The management of a limited liability company is carried out by one or more managers appointed from among or outside the shareholders. At least one of the managers must be a shareholder of the company. Unlike joint-stock companies, limited liability companies are not required to establish a board of directors, which simplifies the governance structure and reduces operational costs for smaller businesses.
Formation Process and Trade Registry
The formation of a company in Turkey begins with the preparation of the articles of association, which must be drafted in accordance with the mandatory provisions of the Turkish Commercial Code and must include the company’s trade name, registered office, business purpose, capital structure, and the details of its founding shareholders and initial managers or board members. The articles are prepared through the MERSİS (Central Registry System) platform, which assigns a unique registration number and generates a potential tax identification number for the company.
Once the articles of association are finalized in MERSİS, the founding shareholders sign the document before the trade registry office or a notary public. The founders must also deposit the required portion of the capital in a bank account opened in the company’s name and obtain a bank certificate confirming the deposit. For companies that include in-kind contributions to the capital, a court-appointed expert must prepare a valuation report assessing the value of the assets being contributed.
The registration application is submitted to the trade registry office at the location of the company’s registered headquarters. Upon registration, the company acquires legal personality and becomes a separate legal entity with its own assets, rights, and obligations. The registration is published in the Turkish Trade Registry Gazette, and the company is simultaneously registered with the relevant tax office and the Social Security Institution.
Company formation in Turkey is exempt from registration fees. The entire process, from the preparation of articles to the completion of registration, can typically be concluded within a few business days, particularly for straightforward formations that do not require ministerial approval or the involvement of specialized regulatory authorities.
Foreign Investment and Equal Treatment
Turkey’s Foreign Direct Investment Law No. 4875 guarantees that foreign investors receive the same treatment as domestic investors in all matters relating to the establishment and operation of companies. There are no restrictions on the percentage of foreign ownership in a Turkish company, and foreign shareholders may hold one hundred percent of the equity in both joint-stock and limited liability companies.
Foreign investors may establish a company in Turkey without holding a residence permit or a work permit. However, if the foreign investor intends to personally manage the day-to-day operations of the company in Turkey, a work permit will be required. Alternatively, the company may appoint a local representative or manager to handle operational matters on behalf of the foreign shareholder. The formation process can be conducted entirely through a power of attorney issued at a Turkish consulate or embassy abroad.
Companies established in Turkey with foreign capital are classified as Turkish legal entities and are generally subject to the same regulatory requirements as domestically owned companies. However, certain sectors, including broadcasting, aviation, and maritime transport, impose specific restrictions on foreign ownership, and investments in these areas may require additional approvals.
Corporate Governance and Compliance Obligations
Once a company is formed and registered, it becomes subject to a range of ongoing governance and compliance obligations under Turkish law. Joint-stock companies are required to hold an annual ordinary general assembly meeting within three months of the end of each fiscal year. The meeting agenda must include the approval of the annual financial statements, the discharge of the board of directors, and the appointment of auditors where applicable. Limited liability companies are subject to similar requirements, though the procedural formalities are generally less complex.
Both joint-stock and limited liability companies are required to maintain proper accounting records in accordance with Turkish accounting standards and to file regular tax returns, including corporate income tax, value-added tax, and withholding tax declarations. Companies with employees must also comply with labor law obligations, including registration with the Social Security Institution, payment of social security contributions, and adherence to occupational health and safety regulations.
Joint-stock companies with a registered capital of 1,250,000 Turkish liras or more are required to retain a contracted attorney under Article 35 of the Attorneys Act. Failure to comply with this obligation may result in administrative fines. This requirement does not apply to limited liability companies regardless of their capital size.
Dissolution and Liquidation
The dissolution of a company in Turkey may occur voluntarily through a resolution of the general assembly, or involuntarily through a court order or by operation of law. Common grounds for dissolution include the expiry of the company’s duration as specified in the articles of association, the achievement or impossibility of the company’s purpose, the reduction of the number of shareholders below the legal minimum for a period exceeding the statutory grace period, and bankruptcy.
Upon dissolution, the company enters a liquidation phase during which its assets are realized, its debts are settled, and any remaining surplus is distributed to the shareholders in proportion to their capital contributions. The liquidation process is carried out by one or more liquidators appointed by the general assembly or, in the case of court-ordered dissolution, by the court. The company retains its legal personality throughout the liquidation process solely for the purpose of completing the winding-up procedures. Once liquidation is completed, the company’s trade registry record is cancelled, and its legal existence comes to an end.
Corporate Lawyer in Istanbul – Attorney Ozan Soylu
Attorney Ozan Soylu is a practicing lawyer based in Istanbul, advising Turkish and foreign clients on corporate law matters including company formation, shareholder agreements, corporate governance, mergers and acquisitions, and regulatory compliance. His practice serves entrepreneurs and businesses seeking to establish or expand their commercial activities in Turkey.
For all legal matters concerning Turkish law, you can reach out to Attorney Ozan Soylu. Legal consultancy and representation services are provided with a dedicated approach for foreign nationals. To submit your questions, contact us.
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