Establishing a Financial Company in Turkey: Steps, Requirements, and Legal Framework

Introduction

Turkey, with its dynamic economy, strategic geographical location, and growing financial markets, has become an attractive hub for both domestic and foreign investors. In recent years, there has been a significant increase in the number of companies seeking to operate in banking, insurance, factoring, leasing, and fintech sectors. However, establishing a financial company in Turkey requires special permits, capital requirements, and strict regulatory supervision, making it different from setting up an ordinary joint stock or limited liability company.

In this article, we will examine in detail the legal framework, types, establishment stages, minimum capital requirements, and key considerations for setting up a financial company in Turkey.

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What is a Financial Company?

Financial companies are institutions that act as intermediaries between savers and borrowers, providing credit, offering insurance, and managing investments. In Turkey, the types and establishment conditions of financial companies are determined by specific legislation.

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Types of Financial Companies in Turkey

Financial companies that can operate in Turkey generally fall under the following categories:

1. Banks (Commercial Banks, Participation Banks, Development and Investment Banks)
2. Factoring Companies
3. Leasing (Financial Leasing) Companies
4. Consumer Finance Companies
5. Insurance and Reinsurance Companies
6. Portfolio Management and Investment Companies
7. Brokerage Firms
8. Asset Management Companies
9. Fintech Companies and Electronic Money Institutions

Each type is subject to different legal and regulatory requirements.

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Legal Framework

The establishment and activities of financial companies in Turkey are regulated by the following primary laws:

• Banking Law No. 5411
• Financial Leasing, Factoring, Financing and Savings Finance Companies Law No. 6361
• Capital Markets Law No. 6362
• Insurance Law No. 5684
• Law No. 6493 on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions

Regulatory and supervisory authorities include the Banking Regulation and Supervision Agency (BRSA), the Capital Markets Board (CMB), and the Insurance and Private Pension Regulation and Supervision Agency (SEDDK).

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Requirements for Establishing a Financial Company in Turkey

1. Minimum Capital Requirements

Different financial company types are subject to different minimum capital thresholds:

• Banks: At least the equivalent of 30 million euros in TL.
• Factoring Companies: Minimum 50 million TL.
• Leasing Companies: Minimum 50 million TL.
• Financing Companies: Minimum 50 million TL.
• Insurance Companies: Minimum 25 million TL (may vary depending on the branch).
• Portfolio Management Companies: Minimum 2 million TL (per CMB rules).
• Brokerage Firms: Between 3 million TL and 25 million TL depending on their license scope.
• Electronic Money Institutions: Minimum 25 million TL.

2. Shareholding Structure

• Founders must have financial strength and credibility.
• Shareholders must not have any connection with money laundering or financial crimes.
• Board members must meet specific educational and professional experience requirements.

3. Licensing Stages

A two-stage licensing system applies to all financial companies:

1. Establishment License → Granted by BRSA, CMB, or SEDDK.
2. Operating License → Granted after the company completes its organizational, technical, and financial infrastructure.

4. Organizational and Technical Infrastructure

• Headquarters, IT infrastructure, and risk management systems must be in place.
• Internal audit and compliance departments must be established.

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Steps for Establishing a Financial Company in Turkey

1. Selection of Founders
   • Founders must meet legal and financial eligibility criteria.
2. Drafting of Articles of Association
   • Must comply with relevant legislation and be registered with the Trade Registry.
3. Application for Establishment License
   • Submit required documents to BRSA, CMB, or SEDDK.
4. Blocking Minimum Capital
   • The required capital must be deposited and blocked in a bank during the establishment process.
5. Approval of Establishment License
   • The regulatory authority grants the license following evaluation.
6. Organizational Setup
   • Establish management, internal audit, and risk management departments.
7. Application for Operating License
   • Submitted once technical and financial adequacy is achieved.
8. Final Approval and Operation
   • The company is authorized to operate in its designated financial sector.

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Advantages of Establishing a Financial Company in Turkey

• Strategic Location: A financial hub connecting Europe, Asia, and the Middle East.
• Young and Dynamic Market: High demand for financial products and services.
• Regulatory Framework: Strong legal protection for investors.
• Growing Fintech Ecosystem: Expanding digital banking and electronic payment services.
• International Investment Opportunities: Easy market entry for foreign investors.

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Key Considerations

1. Regulatory Compliance → Each type of financial company has specific legal obligations.
2. Licensing Procedures → The process can be lengthy; professional legal consultancy is strongly recommended.
3. Capital Adequacy → Capital requirements may increase periodically.
4. International Standards → Compliance with Basel regulations and FATF recommendations is essential.

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Conclusion

Establishing a financial company in Turkey requires significant capital, strict compliance, and regulatory approval, but it also offers substantial opportunities. Banks, insurance firms, factoring and leasing companies, as well as fintech startups, provide investors with diverse options tailored to their needs.