[ESTABLISHING A BUSINESS ENTITY IN TURKEY] 490
ESTABLISHING A BUSINESS ENTITY IN TURKEY A. Types of Business Entities 1. Description of The Types of Entities Pursuant to Turkish Foreign Direct Investment Law, foreign investors are free to make foreign direct investments in Turkey and shall be subject to equal treatment with domestic investors. Thus, foreign-invested companies enjoy the same rights available to local companies under the Turkish Commercial Cod e (“TC C ”). The TCC provides several company structures. However, largely due to advantages regarding liabilities borne by the shareholders, investors most commonly chose between a stock corporation known as anonym sirket which is similar to an Aktiengesellschaft under German law and to a société anonyme under Swiss or French law and limited liability company known as limited sirket which resembles a GmbH under German law or an S.A.R.L. under French law. 2. Matters to Be Considered When Choosing Between Anonim Sirket and Limited Sirket • Both companies can be established with one or more shareholders. • Both companies, in theory, are solely liable for their debts and liabilities with their assets. However, shareholders and directors of a limited sirket are responsible with their personal assets for the tax liabilities and social security contributions which may not be collected from the company. On the other hand, shareholders of an anonim sirket who are not board members do not have such responsibility. According to article 553 of the TCC, board members may only be held liable for damages if they breach any obligation imposed on them by law or the articles of association of the company and
if their fault or negligence caused the damage. • The anonim sirket shares are usually freely negotiable instruments; therefore, share transfers are not subject to notarization and registration. On the other hand, any share transfer in a limited sirket requires fulfillments of execution of the share transfer agreement before a Notary Public, approval of a general assembly of shareholders and registration with the Trade Registry. • The share transfer of a limited sirket is subject to income tax for the selling party. However, in an anonim sirket , if share certificates are held for more than two years by the selling party, the share transfer will not be subject to income tax. • Limited sirket is a simpler form of corporate ownership. There is no compulsory board of directors. The compan y’s business may be managed directly by the shareholders. It is possible to appoint one or more managing directors. For both companies General Assembly Meetings can be held electronically • It is statutory to establish companies operating in certain fields such as banks and insurance companies shall be established as anonim sirket . B. Steps and Timing to Establish Although the required documents for establishing the above-described companies are almost the same, they differ in accordance with either the preferred type or way of participation in the partnership. Common basic steps are as follows:
ILN Corporate Group – Establishing a Business Entity Series
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