Legal Business; Turkish Legal System

Legal Business; Turkish Legal System


Legal Business

Turkish Legal System

The Republic of Turkey is a democratic, secular and social state governed by the rule of law (Constitution Art.2). Turkish laws are made Turkish Grand National Assembly.Turkey adapted many western laws such as civic code from Switzerland in 1926. Therefore, generally Turkish laws are familiar to western laws.  Turkish government makes equal treatment for domestic and foreign companies. Foreign investors dispute settlement either in local courts or international arbitration bodies.

Foreign Exchange Legislation

Turkey has one of the most liberal legal regimes for foreign direct investment in the OECD. With the exception of some sectors, areas open to the Turkish private sector are generally open to foreign participation and investment. Foreign can transfer their funds and profits freely, no permission is needed.

The Legal Forms

According to legislation, foreign can make commercial activities in Turkey. Different business forms are possible to Turkish Commercial Code these are below.

  1. Merchants: Single Proprietorship
  2. Commercial Partnership:Joint Stock Company: The Company’s stock capital is divided into shares and the liability of the share holders is restricted with the capital subscribed by the shareholder. At least 5 share holders (real person or legal entity) and minimum capital of 50.000 TL is mandatory.

    Limited Company: 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. But limited company partners are responsible for tax debts of the company in some situations. Minimum capital of 5000 TL 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.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 

  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. Such an association is based on the principle of mutual help and surety ship. Arrangements related to co-operative associations are governed by the Co-operatives Law.  Foreign owned Turkish companies are treated as Turkish companies. 

  4. Brunch: Also foreigners can open a branch to make commercial activities in Turkey. No minimum capital is required for brunches. Brunch manager is responsible taxation activities. Also mother company is responsible for brunch activities. Brunches are accepted a part of foreign entity. 
  5. Liaison (representative) office: Foreign can open a liaisons office inside Turkey. Liaisons office cannot make commercial activities. Also they cannot be a partner of Turkish companies. Their functions are to make market research, purchasing agreements, monitoring dispatch ext. To open liaison office, permission is necessary from Undersecretariat of Treasury. Employees who work in liaisons offices have tax exemption for salaries that they get outside of Turkey (ITC article 23/14). But employers have to pay their social security taxes for employees.