Turkish joint-stock companies can be established by at least one natural or legal person regardless of their nationality. Foreigners who form or become a partner to a Turkish joint-stock company however, have to obtain a work permit under all circumstances.
Who Is a Foreign Investor?
According to Turkish laws, foreign investors are natural persons who are either foreign nationals or Turkish nationals who do not reside in Turkey, and legal entities established in a foreign country. In accordance with Turkish law they can become partners in companies as foreign partners in Turkey.
Turkey's Foreign Direct Investment Law No. 4875 is based on the principle of equal treatment and allows international investors to be entitled to the same rights and obligations as local investors.
There are two provisions on the basis of this law:
1. “Foreign investors are free to make foreign direct investments in Turkey.” and,
2. “Foreign investors are treated equally with domestic investors.”
In addition, according to Article 17 of Law No. 4875; “Companies that foreign investors are allowed to form or subscribe are the companies regulated under the Turkish Commercial Code and ordinary companies regulated in the Code of Obligations.”
Compliance with Capital Movements Circular
(Dated May 2, 2018)
Articles 5 and 6 of this Circular govern the cases where a foreigner become shareholder to a Turkish company as a founder or as a subsciber to a capital increase. Most of the procedures and principles regarding the obligation of the payment of the capital share are very similar to the procedures applicable to Turkish nationals. Joint-stock company establishment shall be made with a written contract. In Turkish joint-stock companies, the signatures of the founders are either approved by a notary or the articles of association are signed in the presence of the trade registry director. During some parts of the process, presence of a certified translator will be required, to ensure that the foreigner is fully aware of what kind of an obligation they are about to undertake.
However, Article 6 foresees certain time limitations and obligations to the Turkish company with regards to foreign currency capital deposited in the bank account of the Turkish company. In case the non-compliance with the limitations under Article 6, foreign currency funds deposited by the investor may be returned to the owners by the bank.
4875 Foreign Direct Investment Law
Attn. Ferhan Yıldızlı
Ece Baykal, Legal Trainee