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Incorporation of a Company

Among other services being provided by Certified Public Accountants, they are entitled to provide services to implement incorporation of a company (i.e. Joint Stock Company, Limited Liability Company, etc.), branch, liaison office, non-commercial associations and foundations. Please find the summary of the incorporation procedures of the Joint Stock Companies (“JSC”) and Limited Liability Companies (“LLC”), which are the most preferred company types in Turkiye, below.

Briefings on Incorporation of a Joint Stock Company (“JSC”) and Limited Liability Company (“LLC”) in Turkiye

Incorporation procedures along with a preparing of an articles of association process should be completed through an online platform i.e. Mersis. With the 16-digit Mersis number received from the Mersis platform, notarised copies of a Company's articles of association should be obtain from a public notary having an integrated system with Mersis. The incorporation process shall be completed following the physical submission of the articles of association and other required documents (please consult your Certified Public Accountant for further information on the required documents) to the Regional Representative of the Chamber of Commerce. After the company is registered with the Trade Registry Directorate, the signature authorities of the incorporated company should issue signature circulars at the public notary.

Upon completion of the registration in the Trade Registry Directorate, the Trade Registry Directorate makes an official notification to the relevant tax office and the Social Security Institution about the incorporation of the company. The Trade Registry Office announces the incorporation of the company in the Trade Registry Gazette within approx. 10 days following the registration.
A JSC is a type of a company generally preferred by medium and large-scale investors and entrepreneurs. Although the similarity with the LLC has increased with the new Turkish Commercial Code, it is frequently preferred due to the fact that it provides a better management model. In particular, it is more preferred than limited companies due to availability to public offerings, convenience in the transfer of capital shares, bond issuance and unlimited maximum number of shareholders.
The Limited Liability Company, on the other hand, has become one of the preferred types with the new Turkish Commercial Code, which allows the incorporation of a LLC with one shareholder and the removal of the provisions that capital companies cannot carry out any other business activities except the ones clearly stated in their articles of association.

Briefings on Incorporation of a Branch

Among other required procedures to be fulfilled, in order for non-resident enterprises to incorporate a Turkish branch, it is required to (i) apply for a permission of the Ministry of Industry and Technology and (ii) have parent company’s capital divided into shares. In short, non-resident enterprises should (i) give power of attorney to a person residing in Turkiye and (ii) apply and submit the required documents (please consult your Certified Public Accountant for further details on the required documents), to the Ministry of Industry and Technology.

General Comparison on JSC, LLC and Branch

Types of EntitiesJSCLLCBranch
Number of ShareholdersMinimum 1Minimum 1, Maximum 50No shareholder
DurationMay be incorporated either for an indefinite or a certain period.May be incorporated either for an indefinite or a certain period.Duration is limited with the duration of the parent company. It is also possible to determine a limited period equal to or less then the duration of the parent company.
Minimum Capital RequirementThe minimum capital requirement is TRY 50,000, which may be paid either in kind or in cash. For the companies adopting registered capital system, the minimum capital requirement is TRY 100,000.The minimum capital requirement is TRY 50,000, which may be paid either in kind or in cash.There is no capital requirement.
Payment of the capitalAt least 1/4 of the nominal share value must be paid before registration. The remaining portion must be paid within 24 months following the registration. The capital must be paid within 24 months following the registration.N/A
Capital structureCapital has to be divided into shares with a minimum value of TRY 0.01.Capital has to be divided into shares with a minimum value of TRY 25.N/A
Share certificatesShare certificates may be issued either in registered form or bearer form.Share certificates may be issued as proof of the shares or may be issued in registered form.N/A
DebenturesMay issue debentures.Not authorised to issue debentures.N/A
Field of activityPossible to incorporate for all kinds of economic purposes and scopes that are not prohibited by law.Possible to incorporate for all kinds of economic purposes and scopes except banking, insurance and the ones that are not prohibited by law.A branch may be incorporated only for the same purposes with the parent company.
Public sharesCan offerCannot offerCannot offer
Transfer of sharesAllowed, but has certain tax consequences, which is different comparing with the transfer of JSCs’ shares. Please consult your Certified Public Accountants for further details.Allowed, but has certain tax consequences, which is different comparing with the transfer of LLCs’ shares. Please consult your Certified Public Accountants for further details.N/A


Note that the comparison above contains the general information only. These structures should further be analysed from tax and legal perspectives deeply. Hence, not only to receive a implementation service for incorporation process, but also to understand the differences from taxation perspective, we recommend these be discussed with a Certified Public Accountant before making a decision.

Please also note that it is also possible for the foreign investors to incorporate a liaison office. It is required for the liaison office to obtain permit from the Ministry of Economy, General Directorate of Incentive Implementation and Foreign Investment. The initial permit is issued for three years and can be extended depending on the activities in the past three years and the future plans of the parent company. Liaison offices are not allowed to perform commercial activities and may perform auxiliary activities such as market research and feasibility studies and to oversee investment opportunities in the Turkish market.

 

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