Company Establishment

ER CE 1882

T H E ISTA

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THE ISTANBUL CHAMBER OF COMMERCE

MBER OF

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COMPANY ESTABLISHMENT AND REGISTRATION PROCEDURES IN TURKEY IN ACCORDANCE WITH NEW ADJUSTMENTS IN THE LEGISLATION

2005

FOREIGN DIRECT INVESTMENT LAW IN BRIEF The main elements of the new “Foreign Direct Investment Law” are the following; l All former FDI related screening and approval procedures have been abandoned for business set ups and share transfers. Foreign investors will no longer be required to obtain pre approval for these transactions, except for some designated sectors. The conditions for business set ups and share transfers will be the same as for comparable local investors. l Pre approval requirements for certain transactions of foreign investment companies have also been eliminated. Foreign capital companies will follow the same procedures as local companies to realise these transactions. l The minimum capital requirement of USD 50,000 per each foreign shareholder has been abolished.

Foreign investors will be able to form a partnership in Turkey. In the old regime, foreign investors were only allowed to form a joint stock company or a limited company. Now, any form of company included in the Turkish Commercial Code is acceptable for foreign investment. l

l Valuations of international credit agencies as well as courts or competent authorities of the investor’s country will be accepted as valid in the determination of the share value for marketable securities that are contributed as capital in-kind.

The new “Foreign Direct Investment Law” has also reassured the foreign investors’ existing rights on a stable document; The foreign investment legislation is based on the principle of equal treatment for the domestic and foreign investors. Generally foreign investors have the same privileges and obligations as the domestic capital. l

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Foreign capital companies established in Turkey have the same rights to acquire a real estate as domestic investors. Foreign real persons may own a real estate according to the principle of reciprocity. l

Foreign capital entities can employ foreign personnel in Turkey, provided that the work permits are obtained from Ministry of Labour. l

The new Law has retained the permission requirement for Liaison Offices. Liaison offices are special type of offices whose main activity is to conduct market research and feasibility studies and to accumulate investment opportunities in the Turkish market on behalf of their head offices. They are not allowed to carry on any commercial activity. Foreign investors are required to obtain permission from General Directorate of Foreign Investment to open a liaison office in Turkey. The initial permission is given for 3 years, which can be extended depending on the activities performed in the last 3 years and future plans of the head office. In terms of this new law, Turkish nationals who verify with work or resident permit, domiciled abroad are deemed as foreign investors.

THE FORMS OF COMPANIES WHICH CAN BE ESTABLISHED Within the framework of the current Turkish Trade law, The nature of establishing a business activity is mainly described in three ways such as Merchants, Commercial Partnership and Cooperatives. 1)Merchants (Single Proprietorship): The person who is running the commercial establishment individually is accepted as a firm. 2)Commercial Partnership: Commercial Partnership Companies are divided as follows: Joint Stock Company: The company’s stock capital is divided into shares and the liability of the share holders is restricted with the 2

capital subscribed by the shareholder. At least 5 share holders (real person or legal entity) and minimum capital of 50.000 NTL is mandatory. According to the current Turkish Trade Law, banks, private finance institutions, insurance companies, financial leasing companies, factoring companies, holding companies, companies operating as foreign currency exchange offices, companies dealing with public warehousing, publicly held companies subject to the Capital Markets Law, companies that are founders and operators of free zones should be established as Joint Stock Associations and these companies are still subject to permit from Ministry of Industry and Trade for their foundations. Limited Company: It is the company established with participation of minimum 2 and maximum 50 real person or legal entities. The liability of the shareholders is restricted only to the capital subscribed by the shareholder. Minimum capital of 5000 NTL is mandatory. Unlike Joint stock companies no stock certificate is issued. Collective Company: This is an association which has been established with the purpose of engaging in commercial activities under a common trade name. Its most important characteristic is the unlimited liability of the partners for the debt of the association. No minimum capital is required It is mandatory that all share holders should be real person. The relationship between share holders is designated in the articles of association freely. Commandite Company: In this form of business company, some of the partners are liable for the association's debts in the amount of capital which they contributed, while the other partners have unlimited liability. Those partners with unlimited liability are called active partners (commandite) and those with limited liability silent partners (commanditer). Legal entities can only be commandite. No minimum capital is required. The relationship between share holders is designated in the articles of association freely. 3) Co-operative Association: This is a business association established by persons who want jointly to supply various needs connected with their professions, crafts, and livelihoods. 3

Such an association is based on the principle of mutual help and suretyship. Arrangements related to co-operative associations are governed by the Co-operatives Law.

COMPANY ESTABLISHMENT PROCEDURES Although the required documents for establishing the above described companies almost will be the same, however it differs in accordance with either preferred type or way of participation to the partnership. According to the current legislation, all the documents and statements described here below should be submitted to the Trade Registry Offices located at the province where the company or partnership will be established . Since 1996 Istanbul Trade Registry Office has been fulfilling its activity in the building of The Istanbul Chamber of Commerce, with its branches located in Kad›köy, Perpa and Istoç. The documents delivered to Trade Registry Offices should get the official approval after their examination of whether all given and described conditions on the documents and statements are in compliance with legislation and clear that all the rights of third person is covered. Trade Registry Offices have the refusal right for the registration requests which are inappropriate to legislation. The company can start to operate its business activity after the approval and registration of Trade Registry Offices by receiving registration number which is unique for every established company. In Istanbul Trade Registry Office, all registered documents and statements are being computerised and also filed in company dossiers as well. Company registrations and participations are announced to the third person or related parties through being published on Turkish 4

Commercial Registration Newspaper by Trade Registry Offices in Ankara. The related copies of this official newspaper which is published only in Turkish are also computerised and filed in the related companies’ dossiers. All registrations formalities are liable to charges annually declared by Ministry of Finance and the fees for publicity on Turkish Commercial Registration Newspaper are determined by Union of Chambers in Ankara. The general principal of establishing a company is tried to be described on the attached road map.

ROAD MAP OF ESTABLISHING A COMPANY IN TURKEY Notarisation of articles of association

Operation started

Delivery of required documents to trade registry together with company establishment form

Registration at tax office

Company established

1 DAY

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The forms of Chamber Registration Statement, Establishment Statement and Letter of Commitment which are mentioned among the requested documents are available on our web site and can be also provided from our Chamber and its branches. l

1. DOCUMENTS REQUIRED FOR MERCHANT REGISTRATION: 1. Petition (must be signed by the merchant), 2. Company name certified by a notary public (contains the information of home address, business address, business subject, commencement date of operation, nationality, company name and the 3 specimen signatures of the merchant under the company name), 3. A copy of the passport (translated and certified by notary public), 4. Chamber Registration Statement (must bear the photo of the merchant), 5. Letter of Commitment (signed by the merchant), For foreign nationals residing and working in Turkey, notarised residence and work permit must be submitted.

2. DOCUMENTS REQUIRED FOR FORMING COMMERCIAL PARTNERSHIPS A JOINT STOCK AND LIMITED COMPANIES 1. Petition (The Tax Office registered must be indicated, signed by person authorised or by proxy, and the original or notarised copy of the power of attorney must be attached). 2. Establishment Statement (the related gaps must be filled in and signed by an authorised person) – (5 copies). 6

3. Notary public certified Articles of Incorporation (3 copies). In case the foreign national partner is a natural person the documents required are: Two copies of the passport (translated and certified by notary public), In case the foreign national partner is a legal entity the documents required are: The foreign investor should have Activity Certificate of his or her company prepared by the relevant authority in the investor’s country. This certificate should contain the information about the current active status of the company and its signature executives. l

Power of Attorney should show the authority or the natural person who will run the establishment procedure in Turkey on behalf of the company in origin. This attorney should mention company title which will be either established or participated in Turkey and the name of authorised person for presentation. l

The above mentioned certificates (Activity Certificate, Power of Attorney) should be undersigned either by Apostle or Turkish Consulates in Foreign investors’ country. l

The approved certificates should be notarised and translated into Turkish before their delivery to Trade Registry Office. l

4. Signature Declarations of the authorised persons under the company name (2 copies), 5. Original of Bank receipt (receipt from Ziraat Bank Bilkent Plaza Branch indicating that the 4/10000 of the capital is deposited to the Arbitration Court, or the EFT receipt signed and stamped “collected” (Account No: 5383761-5016), 6. Chamber Registration Statement (must bear the photos of natural partners), 7. Letter of Commitment (must be signed by authorised persons). 7

For the foreign nationals residing in Turkey, notarised Residence Permit must be submitted. DOCUMENTS REQUIRED FOR ESTABLISHING JOINT STOCK COMPANY SUBJECT TO THE PERMISSION OF MINISTRY OF TRADE AND INDUSTRY In addition to the above described procedure Notary Public certified Articles Incorporation should also get the approval of Ministry of Trade and Industry Domestic Trade Department.

COLLECTIVE COMPANY 1. Petition (The Tax Office registered to must be indicated, and signed by person authorised or by proxy, and the original or notarised copy of the power of attorney must be attached). 2. Establishment statement (the related places must be filled and signed by the authorised person) - (5 copies). 3. Articles of Incorporation signed by all partners and certified by a notary public (3 copies). 4. Declaration of the company officials’ signatures put under the company name (2 copies). 5. Two copies of the passport (translated and certified by notary public). 6. Chamber Registration Statement (must bear photos of natural partners). 7. Letter of Commitment (must be signed by authorised persons). For the foreign nationals residing in Turkey, notarised residence permit must be submitted. 8

COMMANDITE COMPANY Documents required for establishing a collective company are also required for commandite partnership company. In case the limited partner (Commanditer) is a legal entity; The foreign investor should have Activity Certificate of his or her company prepared by the relevant authority in the investor’s country. This certificate should contain the information about the current active status of the company and its signature executives. l

Power of Attorney should show the authority or the natural person who will run the establishment procedure in Turkey on behalf of the company in origin. This attorney should mention company title which will be either established or participated in Turkey and the name of authorised person for presentation. l

The above mentioned certificates (Activity Certificate, Power of Attorney) should be undersigned either by Apostle or Turkish Consulates in Foreign investors’ country. l

The approved certificates should be notarised and translated into Turkish before their delivery to Trade Registry Office. l

3. DOCUMENTS REQUIRED WHEN ESTABLISHING A COOPERATIVE 1. Petition (signed by an authorised person). 2. Articles of Incorporation approved by the Ministry Concerned (2 copies) and its notarised summary (2 Copies). 3. Letter of Permission by the Ministry. 4. Signature Declaration of the board members of the co-operative under the name of Co-operative (1 copy). 5. Letter of Commitment (must be signed by authorised persons). 6. Chamber Registration Statement (with photos of the partners). 9

The Executive board members of the cooperative shall be Turkish citizens according to the article No. 56 of the Law for Co-operatives, l

For the foreign nationals residing in Turkey, notarised the residence permit must be submitted.

PARTICIPATION TO A PREVIOUSLY ESTABLISHED COMPANY Participation to a previously established company in Turkey can be done in two ways through either share transfer or contribution to the companies’ capital increase . According to the current Turkish Trade Code, share transfers of Joint Stock Companies are not subject to registration by Trade Registry Offices. DOCUMENTS REQUIRED FOR PARTICIPATION THROUGH SHARE TRANSFER 1. Petition (must be signed by an authorised person under the company Seal, if signed by proxy then the original or the notarised copy of the power of attorney must be attached). 2. Notarised Board of Partners Decision in limited companies (the address and nationalities of the partners must be shown with Share Transfer Agreement certified by notary public (2 Copies). 3. Notarised Draft contract about the amendments related to share transfer in the Articles of Incorporation for the Collective and Commandit partnership (2 copies). In case the foreign national partner is a natural person the documents required are: Two copies of the passport (translated and certified by notary public), l

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In case the foreign national partner is a legal entity the documents required are: The foreign investor should have Activity Certificate of his or her company prepared by the relevant authority in the investor’s country. This certificate should contain the information about the current active status of the company and its signature executives. l

Power of Attorney should show the authority or the natural person who will run the establishment procedure in Turkey on behalf of the company in origin. This attorney should mention company title which will be either established or participated in Turkey and the name of authorised person for presentation. l

The above mentioned certificates (Activity Certificate, Power of Attorney) should be undersigned either by Apostle or Turkish Consulates in Foreign investors’ country. l

The approved certificates should be notarised and translated into Turkish before their delivery to Trade Registry Office. l

For the foreign nationals residing in Turkey, notarised residence permit must be submitted. DOCUMENTS REQUIRED FOR THE PARTICIPATIONS THROUGH COMPANIES’ CAPITAL INCREASE 1. Petition (must be signed by an authorised person under the company seal, if signed by proxy then the original or the notarised copy of the power of attorney must be attached). 2. For Collective and Commandit companies; notarised Draft Amendment Contract related to capital increase signatures (2 copies). l For limited companies the shareholders decision certified by notary public which contains the new form of the amended article of the Articles of Incorporation (2 copies), Certified report of the existing status of previously paid capital.

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For joint stock companies Minutes of General Assembly with its necessary attachments (2 copies), Draft Amendment (2 copies), list of Shares showing subscribed capital of each shareholder within the increased capital, certified report of the existing status of previously paid capital, l

Furthermore, the original Permission Letter for joint stock companies subject to permission of Trade and Industry Ministry 3. Original of Bank Receipt (receipt from Ziraat Bank Bilkent Plaza Branch indicating that the 4/10000 of the balance capital is deposited to the Arbitration Court, or the EFT receipt signed and stamped “collected” (Account No: 5383761-5016). In case the foreign national partner is a natural person the documents required are: Two notarised translation of passport copy, In case the foreign national partner is a legal entity the documents required are: The foreign investor should have Activity Certificate of his or her company prepared by the relevant authority in the investor’s country. This certificate should contain the information about the current active status of the company and its signature executives. Power of Attorney should show the authority or the natural person who will run the participation procedure in Turkey on behalf of the company in origin. This Attorney should mention company title which will be either established or participated in Turkey and the name of authorised person for presentation. l

The above mentioned certificates (Activity Certificate, Power of Attorney) should be undersigned either by Apostle or Turkish Consulates in Foreign investors’ country. l

The approved certificates should be notarised and translated into Turkish before their delivery to Trade Registry Office. l

For the foreign nationals residing in Turkey, notarised residence permit must be submitted. For further information, please check our web site at www.ito.org.tr 12

CONTACT DETAILS OF ISTANBUL TRADE REGISTRY OFFICE HEAD OFFICE: Istanbul Trade Registry Office Istanbul Chamber of Commerce Address : Refladiye Cad. 34112 Eminönü, Istanbul / TURKEY Phone : 90 212 455 63 02-03 Fax : 90 212 511 84 37 E-mail : [email protected] Website : www.ito.org.tr

BRANCH DETAILS Perpa Branch Address : Perpa Ticaret Merkezi B.Blok Kat.2 No.79 Okmeydan›, Istanbul / TURKEY Phone : 90 212 210 17 90 (4 lines) Fax : 90 212 210 17 94

‹stoç Branch Address : ‹stoç Toptanc›lar Çarfl›s› 8.Blok No.85/91 Mahmutbey, Ba¤c›lar - ‹stanbul / TURKEY Phone : 90 212 659 69 50 (5 lines) Fax : 90 212 659 46 83

Kad›köy Branch Address : Hasanpafla E¤itim Mah. Poyraz Sk. Erdemler ‹fl Merkezi A Blok No.9 Kad›köy, ‹stanbul / TURKEY Phone : 90 216 449 28 52-53 90 216 418 60 95-97-98 Fax : 90 216 418 60 96

RC E 1882

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T H E ISTA

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AMBE R OF C

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ISTANBUL The City Where the Continents, Seas, Roads, Merchants Meet Istanbul, enjoying all the advantages of its position as a bridge between two continents, seas and the cultural heritage accumulated in its long history, remained for over a thousand years one of the most important centers of the world trade. Istanbul, the world city, can be best served by Institutions operating at world standards. Founded in 1882, Istanbul Chamber of Commerce is an excellent example of such institutions with its pioneering functions, its advanced network, expertise and knowledge as well as its modern, dynamic and productive structure. This publication is mainly focused on the recent adjustments in Foreign Investment Legislation, in parallel with these changes, it is giving information about the procedure in foreign capital company set ups and share transfers with the required documents. It is intended to be a useful manual for foreigners, seeking for a practical information.