As per Turkish Law, foreign nationals may freely incorporate a company in Turkey, be its sole representative and own 100% of it. The most common types of companies that can be incorporated in Turkey are limited liability companies and joint-stock companies.
In a Turkish limited liability company, shareholders are usually active in the management of the company if not the managers themselves. In Turkey limited liability companies are incorporated with a minimum capital of 10,000 TL. This capital does not need to be paid in advance; it can be paid by the shareholders within 2 years from the date of incorporation.
In Turkish limited liability companies, the separation between the entity’s debts and the shareholders’ debts are not as strict. This is because shareholders are personally and jointly liable for the limited liability company’s unpaid taxes, social security premiums or fines to the state. Furthermore, shareholders are prohibited from competing with the limited liability company. Finally, at least one of the directors must be a shareholder; this effectively makes shareholders criminally liable for the actions of the company.
In Turkish limited liability companies, the transfer of shares is relatively more difficult, as the transfer must be approved by the general assembly of the shareholders, be notarized and then registered in the trade registry.
The second type of company is a joint-stock company. In a joint-stock company, the shareholders’ role is more passive as they elect the directors and invest in other businesses as well. The debts of the entity are completely separate from the debts of the shareholders. In joint-stock company, a shareholder’s only debt is to pay his/her share of the capital to the company.
A Turkish joint-stock company is incorporated with minimum 50,000 TL capital and at least 25% of this must be paid prior to the incorporation whereas the rest of it can be paid within 2 years of the incorporation.
In a Turkish joint-stock company, transfer of shares is relatively easier. If the shares are bearer shares, they can be transferred by simply handing the physical share certificates to the transferee. Profits from the sale of shares are exempt from income tax within 2 years of the incorporation.
Joint-stock companies can be offered to the public and become publicly held companies. This way, the cash injection from the IPO can be used to expand the company and exponentially increase profits, creating a win-win situation.
Joint-stock companies also offer some challenges. Joint-stock companies are usually costlier to establish and run. Furthermore, depending on the type, it is mandatory for state officials to attend the general assemblies of some joint-stock companies.
Turkish Republic is always encouraging and supporting foreign investors to invest in Turkey. By law, foreign investors in Turkey have the same rights as Turkish nationals. Furthermore, the government is actively supporting foreign investors in terms of state incentives for new companies and expansions.
State incentives for foreign investors in Turkey include but are not limited to VAT exemption, customs duty exemption, corporate tax reduction, social security premium support (employer’s share), bank loan interest rate support, land allocation, income tax withholding support, VAT refund, qualified personnel support, energy support, capital contribution, infrastructure support, purchasing guarantee, cash support, training support, corporate tax exemption, stamp duty exemption, property tax exemption and special consumption tax exemption.
Antalya Lawyer and Antalya Attorney Baris Erkan Celebi and his Antalya Law Firm offer legal support and legal assistance in all types of Turkish corporate law. These services include but are not limited to limited liability company incorporation in Turkey and legal support in management, joint-stock company incorporation in Turkey and legal support in management, obtaining necessary permits for the company’s relevant fields of operations, applying for and benefiting state incentives that are offered to foreign investors in Turkey.