Running a Business in Turkey By Klaus Jurgens

What type of company is best for expatriates?

Although there are different options available I will focus on the Turkish version of a private limited company, a limited liability company. It is easy to form, requires reduced initial capital and can be set up with a minimum of two people, both of whom can be of non-Turkish nationality.

It reflects on my personal impressions of being in touch with a number of expatriates here in Turkey and their existing or future business interests that are not necessarily linked to public or stock-based companies but focus on smaller, more easily “manageable” types of businesses. The private limited liability model seems to suit their interests best. Other company formats include joint stock companies, commandite companies (a type of company established to conduct business under a trade name), collective companies, liaison offices and the opening of a branch of your already existing foreign-registered business.

How much does it cost?

Let us talk about money next. Those familiar with the English and Welsh system of registering a private limited company and the fact that this is rather inexpensive may be surprised to learn that setting up a business in Turkey sets you back TL 5,000 (in total, not per company director). Twenty-five percent of the cash capital must be fully paid within three months from the date of incorporation with the remainder being paid within three years. Once established, the company must register at the local tax office.

The number of founding shareholders can be anything between two and 50, and it is important to note that all of the shareholders can be foreign nationals.

How much time does it take?

A company can be established in a day provided that all the required documents are ready to be submitted to the Trade Registry. This fast-track approach comes very close to the two or three hours many other countries offer for the same service. Turkey has substantially reduced the amount of red tape necessary to form a new business and in particular how long it takes to get it all done, too.

For the factual information disseminated in the following paragraphs I am indebted to the office of the first economic counselor of the Turkish Embassy in London, the Turkish British Chamber of Commerce and Industry (TBCCI) and the British Chamber of Commerce of Turkey (BCCT), the latter two with offices in İstanbul, as well as the Ankara Chamber of Commerce (ATO).

Articles of Association

The Articles of Association of the new company must be in written form, and the signatures of all founders should be notarized, stating their names, surnames, addresses and citizenship (only for non-Turkish citizenship). The Articles of Association must conform to Article 279 of the Turkish Commercial Code; the trade name has to incorporate the phrasing “limited.”

In case it contains the name and surname of the real person, the phrasing that indicates the company type cannot be abbreviated or displayed in symbols. Since the trade names of legal entities are protected all over Turkey, the designated trade name should not have been previously registered at any registry office.

Your trading name

The trade name should not “mislead third parties with regard to the scope of activities, significance or financial status of the company, nor should [it] contradict facts and public order.

“The words ‘Türk, Türkiye, Cumhuriyet and Milli’ can only be used in trade names provided that there is a decree of Council of Ministers approving such usage.

“The trade name has to be in the Turkish language. … The presence of foreign words in the trade name of a company may be permitted in cases, where these words do not contradict the law, the national, cultural and historical benefits.” (http://www.turkisheconomy.org.uk/investment/establishingacompany.htm)

Important exceptions for what you can do

“For regulated sectors such as banks, private finance institutions, insurance, financial leasing, factoring, holdings, foreign currency exchange offices, public warehousing, founders and operators of free trade zones and companies subject to the Capital Markets Law,” prior approval of the Ministry of Commerce and Industry is required before you can go into business (www.tcanerb.com/Turkey%20Business%20Companies%20Overview.doc). It has to be said, though, that this seemingly long list of prohibited or regulated types of business activities with regards to foreign companies is not normally what the average expatriate would be interested in engaging in, anyway.

The registration of the company at the trade registry office

Turkish Chambers of Commerce such as the ATO are found all over the country and are the correct place to go when you set up your company yourself. It is advisable to have a native Turkish speaker at hand as not only the conversation will most likely be in the Turkish language but all official documents to be filled in are, too.

The Articles of Association are first notarized, and where the company headquarters is located is then registered at the trade registry office within a maximum of 15 days after notarization. The company becomes a legal entity after this registration.

What to bring to the registry office

First, the “written request for registration, accompanied by the completed application form for company establishment notification; the documents must be filled in and signed by persons with signature authority representing the company.”

You will need the letter of commitment in accordance with Article 29 of the Trade Registry Regulation, and the bank receipt of the deposit paid to the Consumers’ Fund account, amounting to 1/1,000 of the company capital.

Needless to say you need a positive ID either in a notarized copy or the original. Finally, if there are movable and immovable assets or any rights to be brought in as capital, you need to produce an expert’s report for ascertaining the value of these assets.

A word about company formation agents

There are a growing number of company formation agents to be found in Turkey, and it is probably best to say that similar to those active in England and Wales some are better equipped to handle all your questions in particular after having helped register your company than others.

Turkey-based cross-border chambers of commerce and industry

For this problem and any other question, locally based chambers with a foreign affiliation are a very helpful and professional port of call. With the United Kingdom as one example, this is where help is at hand both before and after arrival, and as business is their interest, you will find them very useful. With two separate organizations active in Turkey, their services include providing financial status reports and credit references on Turkish companies as well as market information and research reports to meet the individual’s needs, making referrals to legal and financial contacts for consultation, providing special legislation and statistical data concerning bilateral trade between the UK and Turkey, and general information regarding the economies of both countries; they provide a reference library and network of contacts to those seeking business partners either in the UK or in Turkey (www.bcct.org.tr, www.tbcci.org.tr).

Personal impressions

Previously, I had an opportunity to visit the ATO and other local institutions and related offices to obtain copies of the required forms that need to be filled out before setting up a company, and I must say that my reception was more than courteous and extremely helpful. It is advisable to do the same and obtain all required documents in their most recent form well before setting out to register because if anything is missing my comment that it can be done in one working day would, of course, be invalid.

Some issues such as when and how to employ Turkish staff or fellow expatriates and how to close down your company should that become necessary may form part of a follow-up article as each case has to be analyzed on an individual basis.

The general Turkish business outlook: positive investment climate

Which sector you ultimately engage in is, of course, your own choice — market structure surveys or smaller surveys may be what you need to determine which product or service is best suited for your purposes. In general terms it can be said that Turkey has over the years become a very stable economy and welcomes foreign investors both small and big.

Personal disclaimer: Please note that all suggestions in this article, although researched on location, are of a purely personal nature and should not be misinterpreted as legal advice.