Company Formation in Turkey

) Legal Framework & Authorities

• Primary statute: Turkish Commercial Code (Law No. 6102, “TCC”).
• Ancillary legislation: Trade Registry Regulation; Law No. 4875 on Foreign Direct Investment (equal treatment principle); Tax Procedure Law; Social Security Law; labour legislation; data-protection law (Law No. 6698, “KVKK”); anti-money-laundering regime (MASAK regulations/Communiqués).
• Key authorities & systems: Provincial Trade Registry Directorates, MERSİS (central online trade registry system), Notaries, Revenue Administration (corporate tax/VAT), Social Security Institution (SGK), İŞKUR, and sectoral regulators where required (e.g., BDDK, SPK, EPDK).

Practical note: Numeric thresholds (e.g., minimum capital, independent audit limits) are periodically revised by decrees and board decisions. Confirm the latest figures before filing.

2) Common Legal Forms & Governance Architecture

(a) Limited Liability Company (Limited Şirket – “Ltd. Şti.”)

• Shareholders: 1 or more (natural or legal, Turkish or foreign).
• Management: 1+ managers (one may be a shareholder). Legal representation is vested in the manager(s).
• Capital: At least the statutory minimum (subject to periodic increase). Contributions may be cash or, subject to valuation, in-kind.
• Transfer of quotas: Subject to notarized share transfer agreement and registry/update; sometimes approval requirements in the AoA.
• General Assembly: Ordinary annually; extraordinary as needed.
• Liability: Company liable with its assets; managers may face secondary liability for certain public debts (tax/SGK) and for ultra vires/unlawful acts.

(b) Joint Stock Company (Anonim Şirket – “A.Ş.”)

• Shareholders: 1 or more.
• Board of Directors: 1+ members (can be legal entities; at least one real person as representative).
• Capital: At least the statutory minimum; “registered capital system” available for certain companies (subject to Capital Markets Law/permissions where applicable).
• Shares: Freer transferability (especially dematerialized/registered systems); can issue privileged shares, convertible instruments, and adopt sophisticated governance.
• Audit: Independent audit obligation based on thresholds/criteria set by the Public Oversight Authority & Presidential decisions.

(c) Alternatives to Incorporation

• Branch of a foreign company (no separate legal personality; parent liability).
• Liaison office (non-commercial, permit from the Ministry of Industry and Technology; cannot generate revenue).

3) Pre-Incorporation Structuring

1. Select the vehicle (Ltd. Şti. vs A.Ş.) based on governance, exit/transfer mechanics, investor expectations, and future capital markets plans.
2. Shareholder & cap table design: Determine share classes (A.Ş.) or quotas (Ltd. Şti.), vesting, drag/tag, put/call options (documented in AoA and/or separate shareholders’ agreement).
3. Business scope & licenses: Define activities (NACE codes) and check for special licenses (finance, energy, telecoms, education, health, transport, etc.).
4. Registered address: Lease or virtual office in Türkiye; obtain address documentation (lease, title, consent as needed).
5. Director/manager eligibility: Ensure capacity, representation rules, and if foreign managers will sign locally, plan e-signature/apostille logistics.
6. Name clearance: Choose a trade name compliant with the Trade Registry Regulation; reserve via MERSİS.

Foreign participants: Arrange notarized & apostilled corporate documents (articles, incumbency, board resolutions) and sworn Turkish translations. Individuals need tax identification numbers; legal entities typically need a potential tax number before banking.

4) Core Formation Documents

• Articles of Association (AoA): Mandatory clauses include trade name, seat, scope, capital, share structure, management/representation, meeting/decision rules, financial year, announcements, and auditor provisions (if applicable).
• Founders’ declarations & resolutions: Founders’ statement; board/manager appointment; address confirmation; signatory list for signature circular.
• Valuation reports (if in-kind capital): Expert appraisal approved by the court/registry, plus encumbrance checks.
• Bank letter for blocked capital (if required): Proof of capital deposit prior to registration for certain cases.
• Data-controller assessment (KVKK): Determine whether VERBİS registration is required post-incorporation.
• Sector-specific undertakings/permits where needed.

5) Incorporation Procedure (Standard Flow)

1. Draft AoA on MERSİS and generate the standard file set.
2. Notarization & translations: Notarize signatures of founders/managers and translated foreign documents.
3. Capital process: For cases requiring a pre-registration deposit, obtain the bank blocking letter; otherwise plan cash/in-kind timetable per AoA/TCC.
4. Trade Registry filing: Submit the application dossier (AoA, founders’ statement, address docs, IDs, valuation if any, bank letter if applicable).
5. Registration & announcement: Upon approval, the company gains legal personality; basics are published in the Turkish Trade Registry Gazette.
6. Signature circular: Issued by the Notary after registry confirms authorized signatories.
7. Tax registration: Obtain tax number; complete place-of-business opening procedures (site inspection possible).
8. Statutory books & e-systems:
   • Open statutory books (share ledger, manager/board decision book, general assembly minutes, journal/ledger) and enroll in e-Ledger if applicable.
   • Activate KEP (registered e-mail) for official notifications and e-signature for filings/e-invoicing/e-archive where required.
9. SGK & İŞKUR: Register as employer before hiring; conclude employment/OSGB (occupational safety) arrangements.
10. Municipal permits: If the activity requires, obtain workplace opening/operation licenses.
11. Bank account & capital release: Open the corporate bank account; release any blocked capital after registration if applicable; document capital inflows (especially foreign currency) for compliance/statistics.

Timing: With complete paperwork, many provinces complete registrations within days. Add lead time for apostille/translation, in-kind capital valuations, and sectoral permits.

6) Foreign Investment Specifics

• National Treatment: Foreign investors enjoy the same rights as domestic investors (Law No. 4875), save for sectoral/special regimes (e.g., broadcasting, ports, aviation, real estate ownership restrictions near military zones, etc.).
• Documents: Corporate investor packs (AoA, certificate of good standing/incumbency, UBO declaration) must be notarized, apostilled, and translated.
• UBO & AML: Banks will conduct KYC/AML (MASAK). Prepare UBO charts, source-of-funds evidence, and board authorizations.
• Visas & work authorization: Directors/managers may operate from abroad; if relocation is intended, plan residence/work permits in parallel.

7) Capital, In-Kind Contributions & Share Transfers

• Cash capital: Paid per AoA schedule; ensure bank documentation matches registry filings.
• In-kind capital: Must be transferable, unencumbered, and valued by experts; real property, IP, machinery, and receivables may qualify subject to TCC conditions.
• Share transfers:
  • Ltd. Şti.: Notarized transfer deed; update at Trade Registry; AoA may impose approval/pre-emption.
  • A.Ş.: Typically easier; registered shares transfer by endorsement/entry in the share ledger, subject to AoA restrictions and statutory limits (e.g., closed company clauses).

8) Governance, Meetings & Record-Keeping

• Decision-making:
  • Ltd. Şti.: Managers’ resolutions for daily operations; General Assembly for reserved matters (capital increase, AoA amendments, merger, etc.).
  • A.Ş.: Board resolutions; General Assembly for major corporate actions.
• Meetings: Annual ordinary meeting within three months after fiscal year-end to approve financials, profit distribution, and discharge.
• Books & filings: Maintain statutory books; file amendments (address, directors/managers, capital) via MERSİS; publish required announcements in the Gazette.

9) Tax, Employment & Compliance After Incorporation

• Taxes: Corporate income tax, VAT registration, withholding tax obligations, stamp tax on certain documents; e-invoice/e-archive if thresholds/activity require.
• Payroll & labour: Written employment contracts, minimum wage compliance, OSGB services, workplace risk assessments, and data-privacy notices to employees.
• KVKK (Data Protection): Draft privacy notices, data-processing agreements, retention policies; assess VERBİS registration duty (depends on criteria periodically updated).
• Independent audit: Verify if thresholds trigger independent audit; appoint an auditor where required and file the appointment.
• Sectoral reporting & licenses: Ongoing filings to relevant regulators if licensed activity.

10) Banking, KYC & Practical Obstacles

• Bank onboarding: Turkish banks apply robust KYC—UBO charts, apostilled documents, specimen signatures, proof of address/utility bills, and sometimes director presence.
• Currency: Capital may be funded in TRY or foreign currency; track capital movements for compliance/statistics.
• Sanctions & AML screening: Ensure counterparties and UBOs pass sanctions screening to avoid onboarding delays.

11) Typical Timelines & Critical Path

• Fast track (cash capital, domestic founders, standard activities): Document prep (1–3 days), registry (1–3 days), tax/SGK/KEP/e-systems (1–7 days).
• Extended track (foreign corporate founders, in-kind capital, licensed sectors): Add 1–3+ weeks for apostille/valuations/permits and banking KYC.

12) Frequent Pitfalls (and How to Avoid Them)

• Outdated capital thresholds or audit criteria: verify current numbers before drafting the AoA.
• Inadequate scope (NACE) causing post-incorporation licensing issues: align activities early.
• Missing apostilles/translations: plan legalization chains up front.
• Ambiguous representation clauses in AoA: define who signs what (single vs joint signatures) to prevent future deadlocks.
• Ignoring KVKK/MASAK duties: bake privacy/AML into day-one policies.
• Overlooking e-transformation (e-invoice/e-ledger/KEP): order e-signatures promptly.

13) Clean Checklist (Practitioner Use)

Structuring

• Vehicle choice (Ltd. Şti. / A.Ş. / branch / liaison)
• Cap table & governance (managers/board; reserved matters; share classes)
• Business scope & licenses; address/lease

Paperwork

• Name clearance & MERSİS draft AoA
• Founders’ statement; manager/board resolutions
• Notarizations; apostilles; sworn translations
• In-kind valuation (if any); bank blocking letter (if applicable)

Filings

• Trade Registry application → registration → Gazette announcement
• Notary signature circular; tax registration & inspection
• Statutory books; KEP, e-signature, e-invoice/e-archive readiness
• SGK/İŞKUR employer registrations; municipal permits (if required)

Post-Incorporation

• Bank account, capital release, UBO/MASAK files
• Internal policies: finance, AML/KYC, KVKK/privacy, HR & OHS
• Auditor assessment/appointment (if thresholds met)
• Calendarize annual GA, tax filings, and license renewals