1. Introduction
Buy a company in Turkey as a foreigner can be a strategic move for expanding your business into a fast-growing market that bridges Europe and Asia. Turkey offers foreign investors a unique combination of economic potential, a skilled workforce, and favorable trade agreements. However, the process of acquiring a company in Turkey involves specific legal steps under the Turkish Commercial Code and the Foreign Direct Investment Law. This guide explains, step-by-step, how foreign individuals and entities can successfully complete a company acquisition in Turkey while complying with local regulations.
2. Legal Framework for Foreigners Buying Companies in Turkey
The acquisition of a company in Turkey by a foreign individual or entity is primarily governed by:
- Turkish Commercial Code (TCC) No. 6102 – Regulates company structures, share transfers, and corporate governance.
- Foreign Direct Investment Law No. 4875 – Guarantees equal treatment for foreign investors, allowing 100% ownership in most sectors.
- Obligations Law No. 6098 – Governs contractual relationships.
- Capital Markets Law No. 6362 – Applies to publicly traded companies.
Important Note: Certain sectors, such as energy, banking, defense, and broadcasting, may require additional licenses or governmental approvals before a foreigner can acquire shares.
3. Step-by-Step Guide to Buying a Company in Turkey as a Foreigner
Step 1 – Conduct Preliminary Market Research
Before making an offer, it’s essential to:
- Identify the right industry and company.
- Review sector-specific regulations.
- Evaluate foreign ownership restrictions in strategic sectors.
Engaging a Turkish law firm and a financial advisor at this early stage can save time and prevent costly mistakes.
Step 2 – Due Diligence Process
Due diligence is the cornerstone of any acquisition. It involves a detailed examination of the company’s:
- Corporate documents: Articles of association, shareholder agreements, and trade registry records.
- Financial statements: Tax records, debts, liabilities, and cash flow.
- Contracts and obligations: Lease agreements, supplier contracts, and employment agreements.
- Litigation status: Any ongoing lawsuits or administrative penalties.
- Compliance matters: Licensing, regulatory approvals, and environmental permits.
Tip: In Turkey, company information is partly accessible through the MERSİS system (Central Registration System), but full due diligence requires direct cooperation with the company and its representatives.
Step 3 – Negotiating and Drafting the Share Purchase Agreement
The Share Purchase Agreement (SPA) sets out the terms of the acquisition, including:
- Purchase price and payment terms.
- Representations and warranties from the seller.
- Conditions precedent (e.g., regulatory approvals).
- Closing procedures.
Under Turkish law, share transfers in Limited Liability Companies (LLCs) require a notarized share transfer agreement and registration with the relevant Trade Registry.
For Joint Stock Companies (JSCs), share transfers are generally easier, but certain restrictions may apply if the company is in a regulated industry.
Step 4 – Obtaining Approvals (If Required)
While most sectors are open to 100% foreign ownership, acquisitions in regulated industries (e.g., banking, insurance, broadcasting, defense) require governmental or regulatory authority approval.
If the acquisition creates a concentration that may affect competition in the market, the Turkish Competition Authority must be notified under Law No. 4054 on the Protection of Competition.
Step 5 – Closing the Transaction
The closing process typically involves:
- Signing the final agreements.
- Paying the purchase price.
- Transferring shares in the trade registry (for LLCs) or updating the company’s share ledger (for JSCs).
- Updating the company’s articles of association if necessary.
Once completed, the new ownership structure is reflected in the Turkish Trade Registry Gazette.
Step 6 – Post-Closing Obligations
After the acquisition, the buyer must:
- Notify the Ministry of Industry and Technology about the foreign investment.
- Comply with tax registration updates.
- Inform relevant sector-specific regulators if applicable.
4. Tax Considerations
When buying a company in Turkey, foreign investors should be aware of:
- Corporate income tax (currently 25% in 2024, subject to changes).
- Stamp tax (applies to certain contracts at 0.948%).
- VAT exemptions may apply to share transfers in certain situations.
A tax due diligence is strongly recommended to avoid inheriting undisclosed liabilities.
5. Advantages of Buying an Existing Company in Turkey
- Immediate market entry: Start operations without incorporation delays.
- Established client base: Benefit from existing relationships.
- Operational structure: Existing workforce and infrastructure.
- Brand recognition: Leverage the company’s reputation.
6. Potential Risks and How to Mitigate Them
- Hidden debts: Always perform thorough financial and legal due diligence.
- Regulatory compliance issues: Engage local counsel to verify licenses and permits.
- Cultural and management integration: Consider post-acquisition management planning.
7. Conclusion
For a foreigner, buying a company in Turkey can be a highly profitable investment, but it requires strict adherence to the legal process. Working with an experienced Turkish law firm ensures compliance with the Turkish Commercial Code, proper due diligence, and effective negotiation of contracts.
By following the correct procedures, foreign investors can enjoy full ownership rights in most sectors and successfully integrate into Turkey’s growing market.
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