Startup Founders’ Legal Guide to Turkey is not just about which form to tick at the trade registry; it is about understanding the legal soil under your feet before you start building. Turkey sits at a crossroads of Europe, the Middle East and Central Asia, with a modern commercial code, a liberal foreign investment regime and generous tech incentives—but also with its own traps for the unwary founder.
This guide walks you through the key legal concepts every founder should understand before incorporating, fundraising or hiring in Turkey.
1. Choosing your legal vehicle: A.Ş. or Ltd. Şti.?
Under the Turkish Commercial Code (TCC), two corporate forms dominate the startup ecosystem:
- Joint Stock Company – Anonim Şirket (A.Ş.)
- Limited Liability Company – Limited Şirket (Ltd. Şti.)
Both can be founded by a single shareholder, and there is no restriction on foreign ownership—a company incorporated in Turkey is considered a Turkish legal entity, even if 100% of the shares are held by foreign persons or companies.
Minimum capital (as of 2024/2025)
Recent amendments increased minimum capital thresholds:
- A.Ş. (share capital system): at least TRY 250,000
- A.Ş. (registered capital system – often for capital markets): at least TRY 500,000
- Ltd. Şti.: at least TRY 50,000
For an early-stage tech startup, a Ltd. Şti. is still common because it is simpler and cheaper to run. However, if you are targeting angel incentives, VC funds or a later IPO, an A.Ş. is usually the more future-proof structure.
Rule of thumb for founders
- If you are bootstrapping or raising small tickets from friends and family: a Ltd. Şti. can be sufficient.
- If you are building a venture-scale company and expect angels, funds and ESOPs: start as (or convert into) an A.Ş. early, to avoid friction in later rounds.
2. Foreign founders and the FDI regime
Turkey’s Foreign Direct Investment Law No. 4875 is friendlier than many expect:
- foreign and domestic investors must be treated equally,
- there is a notification system, not a general pre-approval regime,
- foreign investors can freely establish companies or acquire shares, subject to limited sectoral exceptions.
Practically, this means:
- You do not need a Turkish partner just to set up a normal tech startup.
- You do need to notify shareholdings and certain changes to the Ministry after incorporation or transfer.
- Banks and public institutions will ask for KYC/AML documentation (passports, corporate documents, apostilles), so factor that into your timeline.
For some regulated sectors—banking, payment services, telecoms, energy—separate licences and ownership restrictions can apply, so sector analysis is crucial if your startup touches those areas.
3. Capital, angels and venture money
Equity and share structure
In an A.Ş., your authorised share capital can be split into classes with different rights (voting, dividend preferences, liquidation preferences, etc.). In practice, investors will expect:
- a clear cap table,
- basic shareholders’ agreement protections (pre-emptive rights, drag/tag along, anti-dilution),
- and, ideally, a registered capital system if you are planning frequent capital increases.
Angel investors and “individual participation capital”
Turkey has a formal angel investor regime, known as Individual Participation Capital (BKY):
- It is regulated by a specific angel investment regulation and overseen by the Ministry of Treasury and Finance.
- Certified Individual Participation Investors (angel investors) can receive tax incentives when investing in qualifying startups, usually structured as joint-stock companies (A.Ş.).
- Criteria exist both for the angel (income/wealth, experience) and for the startup (age, sector, size).
If you want to tap into this pool of incentivised angel capital, you should:
- Incorporate (or transform into) an A.Ş.
- Check whether your company qualifies as a “venture company” under the regulation.
- Draft your shareholders’ agreement so it meshes with the formal BKY documentation.
Venture capital funds
Turkish law also recognises venture capital investment funds and partnerships, regulated by the Capital Markets Board, and there are tax incentives for corporate investors in such VC vehicles.
From a founder’s perspective, the key takeaway is: the legal ecosystem is already designed to accommodate professional equity funding. Standard VC tools—preferred shares, liquidation preferences, vesting—are all possible under Turkish company law when handled carefully.
4. Incentives: technoparks, R&D and tax breaks
One of the strongest cards in a Startup Founders’ Legal Guide to Turkey is the country’s incentive regime for technology and R&D.
Under Law No. 4691 on Technology Development Zones and related R&D legislation:
- Companies located in approved Technology Development Zones (Teknoparks) can benefit from:
- corporate income tax exemptions on certain income derived from software, R&D and innovation;
- income tax exemptions on salaries of R&D, design and support personnel (currently extended until at least 31 December 2028);
- social security premium support for eligible personnel;
- exemptions from certain stamp and customs duties for R&D-related transactions.
In practical terms, if your startup genuinely develops technology or software, setting up in a technopark or registering as an R&D centre can dramatically change your cost structure and runway.
However, these regimes are not automatic grants:
- you must meet and maintain specific criteria,
- your activities and staff time are monitored,
- and the tax authorities can review whether your income truly qualifies.
A founder who ignores the incentive rules risks painful clawbacks later; a founder who structures early with them in mind can redeploy the savings into growth.
5. Intellectual property: who owns the code, the brand, the product?
For tech companies, the real asset is usually intangible:
- software source code,
- algorithms and databases,
- trademarks and domain names,
- designs, creative content and know-how.
Key legal principles to respect:
- Under Turkish law, copyright in software and content typically vests in the author, unless validly assigned.
- Employer–employee relationships often give the employer rights to works created within the scope of employment duties, but this should be made explicit in employment contracts and policies.
- For freelancers and agencies, there is no automatic transfer; you need written IP assignment clauses.
From day one, make sure:
- the company, not the individual founder or developer, owns the core IP;
- trademarks are filed in the name of the company (or a designated IP holding entity), not a random co-founder;
- contributor agreements and NDAs are in place.
Investors will very quickly ask, “Who actually owns the IP?” Your answer needs to be clean and documented.
6. People: employment law and stock options
Turkish employment law is protective of employees and largely mandatory:
- termination without a valid reason can lead to reinstatement claims or compensation for employees with sufficient tenure and headcount (job security rules),
- severance pay, notice periods and unused annual leave pay are often significant line items on exit,
- misclassifying employees as “freelancers” can lead to back-payments of social security and tax.
For startups, two issues appear again and again:
Employment contracts
Use written contracts that:
- define role, duties and working model (on-site, hybrid, remote),
- include IP and confidentiality clauses,
- handle working-time and overtime lawfully,
- respect mandatory minimums (annual leave, notice, severance).
Stock options and founder vesting
Turkey does not yet have a dedicated ESOP statute, but in practice:
- employee equity can be structured via conditional share transfers, call options, phantom shares or bonus schemes;
- founders can agree on vesting schedules and reverse vesting through shareholders’ agreements and share transfer restrictions.
Well-drafted equity and vesting mechanisms ensure that:
- people who leave early do not walk away with disproportionate ownership,
- new investors can join without cleaning up years of informal promises.
7. Data protection, fintech and regulated activities
If your startup touches personal data, you must consider KVKK—Turkey’s Personal Data Protection Law, closely inspired by GDPR:
- processing must have a legal ground (consent, contract, legitimate interest, etc.),
- certain data categories are sensitive and more tightly regulated,
- cross-border transfers to some jurisdictions require additional safeguards or Board approval,
- data subjects have rights to access, correction and deletion.
Non-compliance can lead to administrative fines, investigations and reputational damage. For B2C apps, fintech products, healthtech, ad-tech and AI, KVKK compliance should be part of your product design, not an afterthought.
If you are in payments, e-money, crowdfunding, crypto, insurance, banking or capital markets, check whether you fall under special licences (e.g. payment institution, electronic money institution) or sandbox regimes. Operating “like a bank” or “like an exchange” without a licence is not an experiment; it is a crime.
8. Contracts, disputes and governing law
Even in a global startup, your core contracts—customer terms, vendor agreements, investor documents—will often interface with Turkish law and courts:
- Governing law clauses choosing foreign law are generally respected between commercial parties, but mandatory Turkish rules (e.g. employment, consumer, certain agency rights) may still apply.
- Arbitration (especially Istanbul Arbitration Centre – ISTAC, or international institutions) is widely used for cross-border deals.
- For purely domestic disputes, Turkish courts remain the default forum.
As a founder, you don’t need to become a litigator, but you should understand:
- which disputes you are comfortable sending to arbitration (high-value, cross-border, confidential),
- where you want local courts for enforceability and speed,
- and how your governing law choices interact with mandatory Turkish legislation.
Closing thoughts
Turkey offers founders a rare combination: a large, young market; a strategic location; and a legal framework that, with careful navigation, can be very startup-friendly. The Startup Founders’ Legal Guide to Turkey is ultimately about this: knowing which parts of the system are flexible—and which parts are non-negotiable.
Choose the right entity, structure your cap table intelligently, use the incentive regimes properly, secure your IP, respect employment and data rules, and document your relationships with clarity. Do that, and Turkish law becomes not an obstacle, but the set of rails on which your startup can safely accelerate.
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