Introduction: How Can a Foreign Investor Safely Start a Business with a Turkish Partner?

Starting a company with a Turkish business partner can be one of the fastest ways for a foreign investor to enter the Turkish market.

A local partner may contribute significant commercial value through local customers, distribution networks, regulatory experience, suppliers, employees, market knowledge and relationships that would otherwise take a foreign investor years to develop.

The foreign investor may contribute capital, technology, intellectual property, international customers, management expertise or access to overseas markets.

When these contributions complement each other, the partnership can be highly successful.

The legal risk arises when the parties focus almost entirely on:

“What percentage of the company will each of us own?”

and fail to answer more important questions such as:

Who controls the bank accounts?

Who appoints the managers?

Can one partner borrow money without the other partner’s approval?

Can the Turkish partner issue new shares and dilute the foreign investor?

What happens if the local partner establishes a competing company?

Who owns the technology contributed by the foreign investor?

Can one shareholder sell their shares to a competitor?

What happens when the shareholders cannot agree?

How can the foreign investor exit the company?

These questions usually matter far more than whether the investor owns 49%, 50% or 51%.

Turkey’s foreign direct investment regime is based on equal treatment. International investors generally have the same rights and obligations as domestic investors when establishing companies or acquiring shares, and there is no general requirement that an ordinary Turkish business must have a Turkish shareholder.

This is an important starting point.

A foreign investor should not give a local partner shares merely because someone says:

“Turkish law requires a Turkish partner.”

For ordinary commercial activities, that is generally incorrect. Special restrictions can apply in certain regulated sectors, but the official Investment Office expressly notes that nationality restrictions on shareholders and management are limited to specific areas such as broadcasting, maritime and civil aviation rather than being a general company-law rule.

Therefore, where a foreign investor chooses to establish a company with a Turkish partner, the partnership should exist because the Turkish partner provides genuine commercial value—not because the investor mistakenly believes local ownership is legally mandatory.

The safest approach is to treat the relationship as a long-term investment transaction, not a simple company incorporation.

1. First Ask Whether You Actually Need a Turkish Partner

Before negotiating percentages, the foreign investor should identify what the Turkish partner contributes.

Possible contributions may include local industry knowledge, sales capability, government or regulatory experience, an existing workforce, intellectual property, property, machinery, licences, suppliers or a customer base.

The investor should then ask whether the contribution justifies an ownership interest.

For example, giving 40% of a company permanently to a person merely because they introduced the foreign investor to an accountant and helped locate an office is very different from giving 40% to an established industry participant that contributes an operating distribution network worth millions of euros.

Equity is permanent unless the parties later agree otherwise or an enforceable exit mechanism exists.

Foreign investors should therefore avoid using company shares as a substitute for ordinary compensation.

Sometimes the correct structure is not:

Foreign Investor 60% / Turkish Partner 40%.

It may instead be:

Foreign Investor 100% shareholder + Turkish distributor under a commercial agreement.

Or:

Foreign Investor 100% shareholder + Turkish manager receiving salary and performance bonus.

Or:

Foreign Investor 80% / Turkish strategic partner 20%, with the local stake vesting or otherwise linked to defined commercial obligations.

The appropriate structure depends on what each party actually contributes.

2. Conduct Due Diligence on the Turkish Partner Before Becoming Partners

Foreign investors frequently conduct extensive due diligence when purchasing a company but almost none when selecting the person who will become their business partner.

That can be a serious mistake.

A Turkish partner may be involved in the company for ten years or longer.

Before forming the partnership, the foreign investor should understand the prospective partner’s commercial background, existing companies, litigation history, financial capacity, relationships with competitors and ability to satisfy future funding obligations.

A partner who promises to contribute EUR 1 million should actually have the financial capacity to contribute it.

A partner promising a distribution network should be able to demonstrate that the network exists.

A person describing themselves as an experienced entrepreneur should be able to show a credible operating history.

Due diligence should also identify whether the partner owns competing businesses or has contractual obligations that could conflict with the proposed company.

The key principle is simple:

Due diligence should apply to the partner as well as the business.

3. Choose the Right Company Type: A.Ş. or Ltd. Şti.

The most commonly used Turkish capital companies are the joint stock company (Anonim Şirket – A.Ş.) and limited liability company (Limited Şirket – Ltd. Şti.).

As of 2026, the statutory minimum capital is TRY 250,000 for an ordinary A.Ş. and TRY 50,000 for an Ltd. Şti.; a non-public A.Ş. using the registered capital system has a TRY 500,000 minimum initial capital. Existing companies below the new statutory minimums must increase their capital by 31 December 2026 under the current transitional rule.

The cheaper company is not automatically the safer company.

Official Turkish investment guidance specifically notes that joint stock companies are often preferred for sophisticated joint venture structures because they permit share groups and provide greater flexibility in shareholder structuring. It also confirms that shareholders’ agreements are commonly used to regulate relations between joint venture partners.

For a foreign investor expecting future financing, additional investors, sophisticated governance rights or eventual sale of the business, an A.Ş. may therefore deserve serious consideration.

An Ltd. Şti. can still be appropriate for a smaller, closely held business.

The choice should reflect the expected future of the business rather than incorporation cost alone.

4. Do Not Assume That 51% Ownership Means Complete Control

Foreign investors sometimes believe:

“If I own 51%, I control everything.”

That is too simplistic.

Corporate control depends not only on the percentage of shares but also on:

articles of association, voting thresholds, board composition, reserved matters, signature authority and contractual veto rights.

Likewise, a 40% foreign investor may have substantial protection if the corporate structure requires that shareholder’s approval for strategic decisions.

A company can therefore have:

Foreign Investor – 60%

Turkish Partner – 40%

while still requiring both parties to approve matters such as major borrowing, sale of assets, capital increases or entry into related-party transactions.

The goal should not necessarily be absolute control by one side.

The goal should be to prevent either side from taking actions that fundamentally alter the investment without the other party knowing or consenting.

5. Sign a Detailed Shareholders’ Agreement Before Money Is Invested

A shareholders’ agreement is arguably the single most important contractual protection for a foreign investor entering business with a Turkish partner.

Turkey’s official Investment Office specifically recognises shareholders’ agreements as common practice for governing relations among joint venture parties and maintaining the joint venture.

The agreement should not be postponed until after the company begins operating.

The most effective time to negotiate shareholder protections is before either party is financially locked into the business.

Once the foreign investor has already transferred EUR 5 million, transferred technology and relocated employees, negotiating new protections becomes much harder.

The agreement should deal not only with management while the relationship is good but also with what happens when the parties’ interests diverge.

6. Coordinate the Shareholders’ Agreement with the Articles of Association

A shareholders’ agreement is a contract among the parties.

The articles of association are the constitutional corporate document registered within the Turkish corporate system.

They should therefore be prepared together.

A common mistake is to prepare a sophisticated English-language SHA containing elaborate governance rights and then incorporate a Turkish company using generic articles copied from a standard template.

This can create a gap between:

what the shareholders promised each other contractually

and

how the company is legally structured.

Where Turkish company law permits a particular governance right to be reflected in the articles, the parties should consider doing so.

The company documents should reinforce rather than contradict the investment agreement.

7. Secure Board Representation

A foreign shareholder should generally have a clearly defined right to participate in management.

Suppose the ownership structure is:

Foreign Investor – 40%

Turkish Partner – 60%.

If the Turkish partner can appoint every director and every authorised representative, the foreign investor’s 40% economic ownership may provide far less practical influence than expected.

The corporate structure can instead establish a board composition that reflects the negotiated relationship.

For example:

Foreign investor nominates two directors.

Turkish partner nominates three.

Certain strategic decisions require approval from at least one foreign-investor nominee.

This prevents a simple majority from making every important decision unilaterally.

The right to appoint board members should also address what happens when a director resigns and who has the right to appoint the replacement.

8. Define Reserved Matters and Veto Rights Carefully

Foreign investors usually need protection against major decisions that could fundamentally change the business.

These are commonly called reserved matters.

The objective is not to require unanimous approval for ordinary operations.

Management should still be able to run the business efficiently.

Instead, enhanced shareholder or board approval can be required for matters with substantial strategic or financial consequences.

A useful protection matrix may look like this:

The financial thresholds should be proportionate to the business.

If every EUR 5,000 payment needs both shareholders’ consent, the business will become impossible to operate.

9. Control Signature Authority, Not Just Voting Rights

One of the most underestimated risks in Turkish partnerships is representation and signature authority.

A shareholder may own 60% of the company while another person has authority to sign agreements on behalf of the company.

Foreign investors should therefore determine who can legally bind the Turkish company.

For major commitments, a dual-signature structure can provide protection.

For example:

Routine transactions below TRY X → one authorised manager.

Transactions above TRY X → joint signatures.

Loans, guarantees, asset disposals and related-party transactions → board or shareholder approval plus joint signature.

A foreign investor should be particularly cautious about granting a local partner unlimited representation authority merely because the foreign shareholder lives abroad.

Corporate control on paper can become meaningless if the other shareholder can independently:

borrow money, guarantee another company’s debt, sell company assets or transfer substantial funds.

10. Establish Independent Controls Over Bank Accounts

Banking controls deserve separate attention.

Many shareholder disputes ultimately become disputes about access to cash.

The agreement should regulate who can:

open or close bank accounts, create online banking users, make international transfers, add beneficiaries, borrow money or issue payment instructions.

For material payments, dual approval may be appropriate.

The foreign shareholder should also have direct visibility into company bank balances rather than receiving screenshots or spreadsheets prepared by the other partner.

A company should never operate with:

“Only the Turkish partner knows the online banking password.”

That is not an internal control system.

11. Protect Against Dilution Through Capital Increases

One of the most serious risks for a minority shareholder is dilution.

Suppose:

Foreign Investor owns 40%.

Turkish Partner owns 60%.

The company later needs substantial additional capital.

If the foreign investor cannot participate or appropriate protections are absent, a capital increase can reduce the foreign investor’s ownership dramatically.

Capital increase rules should therefore be considered when the original shareholder agreement is negotiated.

The foreign investor should understand its rights to participate in future capital increases and what happens if one shareholder does not provide its proportionate funding.

Possible solutions include shareholder loans, third-party financing or agreed dilution mechanisms.

Capital increases should never become an artificial tool used simply to force a shareholder out.

12. Agree the Future Funding Model in Advance

The company’s initial capital may be enough for the first year but not for the fifth.

A well-structured partnership therefore answers:

What happens when the company needs more money?

Possible sources include:

shareholder capital, shareholder loans, bank finance, external equity investors or retained profits.

The agreement should determine whether shareholders have an obligation to provide additional funding.

If additional funding is optional, the consequences of one party funding and the other refusing should be specified.

Without a funding policy, disagreements over money can quickly become disagreements over control.

13. Establish a Clear Dividend Policy

A profitable business can still create shareholder conflict if the parties disagree about whether profits should be distributed or reinvested.

The Turkish partner may want annual dividends.

The foreign investor may want to reinvest profits for growth.

Or the reverse may occur.

An agreed dividend policy can therefore establish principles governing:

minimum reserves, working capital requirements, debt repayment, investment budgets and distributions.

The policy should remain commercially flexible but should prevent the controlling shareholder from indefinitely withholding profit solely to pressure the minority.

14. Prevent Related-Party Transactions From Moving Value Out of the Company

A local majority shareholder may own other Turkish companies.

Those companies might provide:

rent, logistics, consultancy, suppliers, marketing or management services

to the jointly owned company.

There is nothing inherently wrong with related-party transactions.

The risk is that they may be used to transfer value out of the company.

For example, instead of distributing profit to both shareholders, the majority shareholder could cause the company to pay an inflated management fee to another company that the majority owns 100%.

A shareholders’ agreement should therefore establish procedures governing related-party transactions.

These may include disclosure, arm’s-length pricing, board approval and exclusion of the conflicted shareholder from specified decisions.

15. Secure Information and Reporting Rights

A foreign shareholder located outside Turkey should not depend entirely on information supplied voluntarily by the local partner.

Regular reporting should be required.

This can include monthly financial statements, bank balances, management accounts, receivable ageing, debt, tax obligations, sales information and budget comparisons.

The investor should have reasonable access to corporate records and auditors.

Information rights become particularly important when the investor does not participate in daily management.

A shareholder cannot protect an investment if it learns about problems only after they become irreversible.

16. Use Independent Accounting and Audit Controls

The local partner should not unilaterally control:

management, bank accounts and financial reporting

while also appointing the only accountant reporting on those activities.

Depending on the size and sophistication of the business, the shareholders can agree on:

an independent accounting firm, periodic external review or jointly selected independent auditor.

Foreign investors should also ensure direct access to statutory filings and financial statements.

A basic principle of joint control is:

The person spending the money should not be the only person reporting where the money went.

17. Protect Intellectual Property Before It Enters the Turkish Company

For technology and brand-driven businesses, intellectual property can be worth more than physical assets.

A foreign investor may contribute:

software, patents, trademarks, designs, databases, know-how or trade secrets.

The investor should decide whether the Turkish company receives:

ownership

or merely:

a licence.

This distinction is fundamental.

If the foreign investor transfers the entire IP to the jointly owned company, the Turkish partner indirectly owns part of that IP through its company shares.

If the partnership later collapses, recovering the IP may be difficult.

In many joint ventures, the foreign investor therefore retains ownership of pre-existing technology and licences it to the Turkish operating company under clearly defined terms.

The agreement should separately determine who owns new intellectual property created during the partnership.

18. Use Strong Confidentiality and Non-Compete Protections

The Turkish partner may gain access to:

foreign technology, customer lists, pricing, technical methods, supplier terms and international business strategies.

These materials should be protected.

A confidentiality regime should survive termination of the partnership where appropriate.

Non-compete and non-solicitation protections can also be considered, although their scope should be reasonable and reviewed under Turkish competition and contract law.

The objective should not be to prevent the Turkish partner from earning a living indefinitely.

The objective is to prevent the partner from using the jointly owned company’s confidential information to build a competing business.

19. Clarify Who Employs the Key Personnel

Foreign investors often send a trusted executive to manage the Turkish operation.

The parties should determine:

who appoints the CEO, who can dismiss the CEO, who determines compensation and whether key executives report to the board or one shareholder.

Foreign executives also require separate work-permit analysis.

Under the current 2026 framework for qualifying foreign company partners, the ordinary criteria generally include at least TRY 500,000 company paid-up capital, at least TRY 500,000 foreign-partner capital participation, at least 20% shareholding and, from the seventh month of the first permit, employment of five Turkish citizens. The Ministry expressly states that these specific company-partner tests are not applied where the foreign partner’s capital participation is at least USD 100,000.

The Ministry also introduced a further exception effective 3 August 2026 for certain foreigners with qualifying prior lawful residence in Turkey, subject to the detailed conditions.

Company ownership should therefore be designed together with management and immigration planning.

20. Keep the Foreign Investment Records Correct

Foreign-invested Turkish companies are subject to foreign investment information reporting through E-TUYS.

The official Investment Office identifies electronic forms covering foreign direct investment activity, capital and share transfers.

This is especially important in a partnership because the ownership structure may later change through:

capital increase, foreign investment, transfer of shares or investor exit.

Foreign investors should ensure responsibility for E-TUYS is clearly allocated and should not assume ordinary Trade Registry filings automatically satisfy every foreign-investment reporting obligation.

21. Pay Attention to the 2026 ETDS Corporate Book Rules

Corporate record-keeping became especially important in 2026.

The Ministry of Trade confirms that companies registered from 1 January 2026 must keep their share ledger and general assembly meeting and negotiation book through the Electronic Commercial Book System (ETDS). The electronic board decision book remains optional under the current system.

This matters directly for foreign investors because share ownership and corporate decisions should be reflected correctly in the company’s official records.

In a shareholder dispute, informal WhatsApp messages and private spreadsheets are no substitute for proper corporate documentation.

Foreign shareholders should therefore ensure that corporate approvals, share changes and shareholder information are formally recorded.

22. Restrict Share Transfers to Unwanted Third Parties

A foreign investor may choose a specific Turkish partner because of that person’s experience and reputation.

The investor may not want the Turkish partner to sell the shares one year later to:

a competitor, an unknown third party or someone with whom the foreign investor would never have entered business.

The SHA can therefore regulate future transfers.

Common protections include lock-up periods, permitted transfers, pre-emption rights and rights of first refusal.

The purpose is to preserve control over who becomes the investor’s future partner.

23. Use Tag-Along Rights to Protect the Minority

Suppose:

Turkish Partner owns 60%.

Foreign Investor owns 40%.

A third party offers to purchase the Turkish partner’s entire 60% interest.

Without contractual protection, the foreign investor may suddenly find themselves holding 40% alongside a completely unfamiliar new controlling shareholder.

A tag-along right can allow the foreign investor to participate in the sale on corresponding terms.

This is one of the most valuable exit protections for a minority investor.

24. Use Drag-Along Rights to Make a Full Exit Possible

Now assume the foreign investor holds 70%.

A strategic buyer offers an attractive price but will purchase the company only if it can acquire 100%.

The 30% shareholder refuses.

A properly drafted drag-along mechanism can allow a qualifying majority shareholder to require the minority to sell on the same agreed terms, subject to negotiated safeguards.

Without such a provision, a small shareholder can potentially block an otherwise attractive full-company exit.

Tag and drag rights should therefore be negotiated together.

25. A 50/50 Company Must Have a Deadlock Mechanism

Deadlock is one of the biggest risks in equal partnerships.

Suppose both shareholders own 50%.

One wants to expand.

The other wants to distribute profits.

One wants to borrow.

The other refuses.

One wants to replace the general manager.

The other blocks the appointment.

If the company documents simply require both parties to agree, the company may become paralysed.

A deadlock mechanism can provide several stages.

The matter may first be escalated from the Turkish operating managers to senior executives of the shareholders.

Technical disputes can potentially be referred to an independent expert.

Commercial disputes may proceed through mediation or another agreed process.

If deadlock remains unresolved, a buy-sell or exit mechanism may ultimately be triggered.

The objective is not to prevent disagreements.

It is to prevent disagreements from permanently freezing the company.

26. Do Not Copy a “Russian Roulette” Clause Without Understanding It

Some JV agreements contain mechanisms where one shareholder names a price and the other must either buy or sell at that valuation.

These clauses can be effective between economically equal partners.

They can be extremely unfair where one shareholder has far more financial resources.

Imagine:

Global Corporation vs small Turkish entrepreneur.

If the multinational triggers a buy-sell process requiring immediate financing, the local shareholder may have no practical ability to buy even if the proposed valuation is low.

The same problem can exist in reverse where the foreign investor is the smaller party.

Deadlock provisions should therefore reflect the parties’ financial realities.

27. Define What Happens if a Shareholder Breaches the Agreement

The parties should distinguish ordinary contractual disputes from serious shareholder default.

Potential serious defaults may include fraud, misuse of company money, breach of confidentiality, unauthorised competition, refusal to provide committed funding, insolvency or diversion of company business to another enterprise.

The agreement can provide appropriate consequences, potentially including damages or agreed share-transfer mechanisms where legally enforceable.

The drafting should be commercially effective without becoming an unenforceable penalty mechanism.

28. Prevent the Turkish Partner From Diverting Business Opportunities

A local partner may operate several companies.

The parties should determine which opportunities belong to the jointly owned company.

For example, if the JV distributes a foreign manufacturer’s products in Turkey, can the Turkish partner establish another company selling competing products?

Can the partner direct customers to another business it controls?

Can employees or suppliers be moved from the JV to an affiliated company?

These issues should not be left to informal expectations.

Conflicts-of-interest and corporate-opportunity provisions can reduce the risk of value being diverted outside the jointly owned company.

29. Consider Competition Law When Creating Joint Control

Some shareholder protections can have consequences beyond corporate law.

If two shareholders have strategic veto rights and jointly control a full-function business, merger-control analysis may become relevant.

Turkey updated its merger-control thresholds in February 2026. The Competition Authority increased the principal figures from TRY 250 million to TRY 1 billion, from TRY 750 million to TRY 3 billion and from TRY 3 billion worldwide turnover to TRY 9 billion.

Therefore, significant joint ventures, share acquisitions or changes in control should be reviewed for Turkish Competition Authority notification before implementation.

The fact that each investor owns less than 50% does not automatically mean there is no control issue.

30. Check Whether the Sector Has Special Foreign Ownership Rules

The general rule of equal treatment does not eliminate sector-specific regulation.

Turkey’s official investment guidance specifically notes that nationality restrictions may arise in certain sectors such as television broadcasting, maritime and civil aviation.

Other regulated businesses may require licences or regulator consent for ownership changes even where there is no straightforward nationality prohibition.

Foreign investors should therefore analyse the actual business before finalising share percentages.

Company registration under the Turkish Commercial Code does not itself mean the company is authorised to conduct every regulated activity.

31. Control Guarantees and Company Borrowing

A particularly dangerous scenario is where the Turkish partner controls management and causes the jointly owned company to guarantee debt owed by another business belonging solely to that partner.

The foreign investor can lose value without receiving any commercial benefit.

The shareholders’ agreement should therefore restrict:

company guarantees, security over assets, unusual shareholder loans and material third-party borrowing

without enhanced approval.

The same principle applies to pledging company assets.

The jointly owned company should serve its own business, not become a financing vehicle for one shareholder’s unrelated activities.

32. Do Not Leave Company Assets in a Partner’s Personal Name

Foreign investors sometimes establish a company but allow critical assets to remain registered to the local partner.

Examples include:

domain names, trademarks, vehicles, office lease, social media accounts or software subscriptions.

This is dangerous.

If the partnership fails, the investor may discover that commercially essential assets do not actually belong to the company.

Where an asset is intended to be a corporate asset, it should normally be properly owned or legally controlled by the company.

This principle is particularly important for:

trademarks, domain names and digital accounts.

33. Keep Control of Passwords, Domains and Digital Infrastructure

Modern company control is not limited to Trade Registry documents.

Operational control can depend on:

company e-mail, cloud accounts, website hosting, domain registrar, social media, online marketplaces, source-code repository and payment platforms.

A Turkish partner should not be the sole administrator of all these systems.

Corporate accounts should be established in the company’s name where possible.

Multiple trusted administrators and recovery mechanisms should be created.

A shareholder agreement cannot protect the investor effectively if the company loses access to its own digital infrastructure overnight.

34. Decide in Advance How the Investor Can Exit

Every partnership eventually ends in one of three ways:

the partners continue indefinitely, one partner exits or the entire business is sold.

A foreign investor should therefore understand the exit route before investing.

Possible mechanisms may include:

sale to the other shareholder, sale to a third party, put or call arrangements, strategic sale of the company, IPO in suitable cases or liquidation.

The agreement should also establish how shares are valued where one party exits without an independent third-party offer.

An exit mechanism based solely on:

“We will agree on the price later”

is not an exit mechanism.

It is an invitation to future litigation.

35. Select the Dispute Resolution Mechanism Before a Dispute Exists

The shareholders’ agreement should specify:

governing law, competent court or arbitration, seat and language where arbitration is used.

Foreign investors often prefer arbitration for cross-border shareholder disputes because of neutrality and potential international enforceability.

However, the Turkish company itself remains subject to mandatory Turkish corporate law.

Certain disputes involving corporate resolutions, Trade Registry matters or mandatory corporate remedies may therefore require Turkish-law analysis regardless of what the shareholders’ agreement says.

The dispute-resolution provision should be designed around the actual structure rather than copied from an unrelated international agreement.

Practical Example: Foreign Investor Owns 49%, Turkish Partner Owns 51%

Assume a British manufacturing group enters the Turkish market.

The structure is:

British Investor – 49%

Turkish Strategic Partner – 51%.

The British investor contributes:

EUR 5 million capital, technology and its international brand.

The Turkish partner contributes:

an established customer network, local management and EUR 1 million capital.

If the parties simply incorporate the company 49/51 and stop there, the foreign investor may be highly vulnerable.

A more protective structure could provide the foreign investor with board representation, approval rights for major borrowing, capital increases, asset disposals, related-party transactions and IP decisions; joint control over significant bank transfers; detailed monthly reporting; contractual protection against dilution; ownership of background technology remaining with the British parent while the Turkish company receives an appropriate licence; restrictions on competing activities; tag-along protection if the Turkish shareholder sells control; a defined deadlock mechanism; and an agreed exit structure.

The foreign investor still owns only 49%.

But its legal position is significantly stronger.

This illustrates why percentage ownership and investor protection should never be treated as identical concepts.

Frequently Asked Questions

Does a foreign investor need a Turkish partner to establish a company in Turkey?

Generally no. Turkey’s foreign investment framework is based on equal treatment, and international investors may generally establish Turkish companies without a local shareholder, subject to specific sector rules.

Can a foreigner own 100% of a Turkish company?

Generally yes for ordinary commercial companies, subject to sector-specific restrictions.

Is 51% ownership enough to protect the foreign investor?

Not necessarily. Effective protection also depends on board representation, articles of association, veto rights, signature authority, bank controls and shareholder agreements.

What is the most important document when starting a company with a Turkish partner?

A carefully drafted shareholders’ agreement is one of the most important protections. Official Turkish investment guidance expressly recognises the common use of shareholders’ agreements in joint ventures.

Should an A.Ş. or Ltd. Şti. be used?

It depends on the business. An A.Ş. frequently provides greater flexibility for sophisticated investment structures and share groups, while an Ltd. Şti. may be suitable for simpler closely held businesses. Official Investment Office guidance identifies A.Ş. as a commonly preferred joint venture vehicle.

What is the minimum capital in 2026?

The minimum is TRY 250,000 for an ordinary A.Ş. and TRY 50,000 for an Ltd. Şti. A non-public A.Ş. using the registered capital system has a TRY 500,000 minimum starting capital.

Can the minority shareholder have veto rights?

Yes, shareholder and corporate documents can be structured to require enhanced approval for strategically important decisions, subject to Turkish corporate and competition law.

How can a foreign investor prevent dilution?

The investor should address future capital increases, funding obligations and subscription protections in the original corporate and shareholder structure.

How can the investor prevent the Turkish partner from taking money out of the company?

Bank authority, signature rules, related-party transaction restrictions, reporting requirements and independent accounting controls should be established from the beginning.

What is a tag-along right?

It allows a minority shareholder to participate in a sale by the controlling shareholder under agreed conditions, protecting the minority from being left behind with a new controlling partner.

What is a drag-along right?

It can allow a qualifying majority shareholder to require minority shareholders to participate in a full-company sale under specified conditions.

What happens if a 50/50 company cannot make a decision?

A properly drafted shareholders’ agreement should contain a deadlock mechanism including escalation and, where necessary, a final buy-sell or exit procedure.

Should the foreign investor transfer its software or trademark to the Turkish company?

Not automatically. The investor should consider whether the Turkish company actually needs ownership or whether a carefully drafted licence is more appropriate.

Do foreign managers need work permits?

Potentially yes, depending on their actual role and available exemptions. Foreign share ownership itself does not automatically authorise active work in Turkey. Current company-partner work permit criteria include capital, ownership and employment requirements, subject to exceptions including the USD 100,000 capital-share rule.

Is E-TUYS relevant?

Yes. Foreign-invested companies must consider electronic foreign-investment activity, capital and share-transfer reporting through E-TUYS.

What changed for company books in 2026?

Companies registered from 1 January 2026 are required to keep their share ledger and general assembly meeting and negotiation book electronically through ETDS.

Conclusion: What Is the Best Way for a Foreign Investor to Protect Themselves Against a Turkish Business Partner?

The strongest protection is created before the partnership begins.

A foreign investor entering Turkey should first understand that a Turkish partner is not generally required merely because the business will operate in Turkey. Foreign investment legislation is based on equal treatment, and foreign investors generally have the same rights and obligations as domestic investors in ordinary company establishment and share ownership.

This means the decision to give a Turkish partner equity should be a commercial decision.

The investor should ask:

What permanent value does this person contribute that justifies permanent ownership in the company?

Once that question is answered, protection should be built in several layers.

The first layer is ownership and governance.

Share percentages should be combined with board representation and reserved matters.

A foreign investor should not assume that owning 51% automatically gives complete control, nor should a foreign minority investor assume that holding 40% leaves them powerless.

Properly structured governance rights can materially change the balance of control.

The second layer is a professionally drafted shareholders’ agreement.

Turkey’s official investment guidance expressly confirms that shareholder agreements are commonly used to manage joint venture relationships.

The shareholders’ agreement should be negotiated before the investment is irreversible.

It should determine what happens when the shareholders agree—and, even more importantly, what happens when they do not.

The third layer is control over management and company money.

Board rights mean little if one partner independently controls every signature and every bank account.

Representation authority, bank payment limits and material financial decisions should therefore reflect the agreed governance model.

The fourth layer is protection against economic dilution and value leakage.

Capital increases should not become a mechanism for forcing out one shareholder.

Related-party agreements should not allow one partner to shift profits to businesses that only that partner owns.

Corporate guarantees should not be used to finance unrelated shareholder businesses.

The fifth layer is information.

A shareholder who cannot access financial information cannot meaningfully supervise an investment.

Regular reporting, banking visibility, audit access and corporate records should therefore be treated as investor rights rather than voluntary courtesies.

The sixth layer is intellectual property.

A foreign technology or brand owner should determine exactly what the Turkish company receives.

Where permanent transfer is unnecessary, retaining ownership of background IP and licensing it to the joint business may provide materially stronger protection if the partnership later terminates.

The seventh layer is corporate opportunity and competition protection.

The Turkish partner should not be able to use the investor’s technology, confidential information and customer relationships to establish a competing operation while still holding shares in the joint company.

Reasonable confidentiality, conflict-of-interest and competition restrictions should therefore be considered.

The eighth layer is share-transfer protection.

The foreign investor should know who can become its future partner.

Pre-emption or similar restrictions can protect against unwanted transfers.

A minority investor should consider tag-along rights.

A controlling investor planning a future strategic exit should consider drag-along rights.

The ninth layer is deadlock planning.

A 50/50 partnership without a deadlock mechanism can become one of the most difficult corporate structures to manage.

The correct question is not whether the shareholders expect to disagree.

They will eventually disagree about something.

The question is:

Does the agreement contain a workable process that prevents disagreement from destroying the business?

The tenth layer is exit.

No shareholder should invest millions of euros while assuming:

“If things go wrong, we will work something out.”

The valuation mechanism, transfer rights, put/call structures where appropriate and strategic-sale rules should be agreed while relations remain good.

Corporate compliance should then support these contractual protections.

Foreign-invested companies should keep E-TUYS information current, and newly registered companies in 2026 must also operate under the current ETDS rules for the share ledger and general assembly meeting book.

Foreign managers should separately consider work authorisation. The fact that an international investor owns shares does not itself give a foreign individual the right to work in the company. Current 2026 company-partner work permit criteria can materially influence capital and shareholding structures.

For larger transactions, competition law should also be examined. Turkey increased its merger-control thresholds in February 2026, and strategic veto rights or joint control can make competition analysis relevant even where no party owns an outright majority.

Ultimately, the safest structure can be summarised as:

partner due diligence → company type → ownership percentages → shareholders’ agreement → articles of association → board representation → reserved matters → signature and bank controls → capital/funding protections → information and audit → IP protection → conflicts and related-party rules → transfer restrictions → tag/drag → deadlock → dispute resolution → exit.

The biggest mistake a foreign investor can make is to believe that trust makes these protections unnecessary.

A strong shareholders’ agreement is not evidence that the parties distrust each other.

It is evidence that they understand the commercial relationship well enough to define it clearly.

When the business succeeds, clear rules reduce unnecessary conflict.

When circumstances change, clear rules protect both sides.

And when the relationship genuinely breaks down, clear rules may determine whether the investor can exit a valuable business efficiently or spend years in shareholder litigation.

For that reason, a foreign investor considering a Turkish partner should not ask only:

“How much of the company should I own?”

The more important questions are:

“What can happen to my investment without my consent?”

“What prevents value from being transferred away from the company?”

“How will I know what is happening financially?”

“What happens if my partner and I disagree?”

“How can I leave?”

If those questions have clear contractual and corporate answers before capital is invested, the foreign investor is in a much stronger position.

This article reflects Turkish corporate, foreign-investment, competition and work-permit legislation and publicly available official guidance as of August 2026. It is intended for general informational purposes only and does not constitute transaction-specific legal, tax, competition, employment or investment advice. The appropriate protections depend on the company’s legal form, ownership percentages, sector, investment amount, management model, intellectual property and commercial objectives.