How to set up a business in Turkey?
After establishing the desired type of business including limited liability companies, joint stock companies, commandite companies, collective companies or commercial partnership, the registration process takes almost one week. The foreign investor must also benefit form a certain amount of capital before starting a business. For instance, the limited liability company requires a minimum share capital of 10.000 TRY, while the joint stcok company must deposit at least 50.000 TRY.
How to register a new business in Turkey
Foreign enterprises who want to open business in Turkey are required to complete a few steps before starting operating.
These steps are made up of;
- Choosing the type of company they want to establish and have the incorparation documents drafted and notarized in accordance with the companies law
- Open the corporate bank account and deposit the share capital required by the law
- Appoint the company’s directors or managers, as priscribed by the legislation
- Submit the incorporation documents and the details of the shareholders and managers with the Trade Register
- Obtain the tax and VAT numbers, as well as registering for social security purposes
Documents needed to open a company in Turkey
One of the most important steps in opening a company in Turkey is the preparation of the documents needed to register the business with the Trade Registrar. The main set of documents which need to be drafted and notarized is the Articles of association which need to contain all the details of the shareholders- their names, their places of residence, their contribution to the share capital of the company and the number of shares they own in the business.
The Article of Association must also contain about he managers of the company, including their name, the way in which they are appointed and can be revoked and their duties and obligations.
The same document must clearly state the Turkish company’s trade name, its address in this country and a description of the object of activity. The Articles of Association can also contain other clauses, related to amendments which can be brought to the company and dispute resolution methods if any problems appear between the shareholders.
An important aspect which should be considered is that in the case of setting up a sole proprietorship, a simple application form needs to be filed with the Trade Register. In the case of partnerships which in Turkey are known as comandite companies, the partnership deed stands at the base of their creation.
Shareholders in a company in Turkey
The shareholders are the founders of the company,or better said the owners of the business. These can be natural persons or companies and have various rights, but also duties in the company.
The minimum number of shareholders a Turkish company can have is one in both private and public companies. These can be Turkish citizens or residents; however, foreigners can also act as sole shareholders when opening a company in Turkey.
One of the main responsibilities of the shareholders is to contribute to the share capital of the business. Based on their conrtibutions, they will acquire more or fewer rights in the company. The greatest advantage of shareholders is that their liability towards the company’s debts and other obligations is going to be limited to the amount of money they invested in the company in the case of limited liability companies. In the case of partnership, the role of shareholders is completed by the partners or members.
Company Management in Turkey
One of the most important roles in a Turkish Company is taken on by the managers of the company. The shareholders are required to appoint at least one company director in the case of a private company. A board of the managers must ensure the management of the public company in Turkey. The same type of company must have at least one auditor appointed. In the case of private companies, the auditor will be an independent one will be called only when the financial documents of the business need to be audited. It should be noted that no matter the type of company, at least one of the shareholders must be a company director. The manager role can also be fulfilled by another company with the conditions that it appoints a natural person as a company representative.
The trade name and legal address when opening a company in Turkey
The first step for registering a business in Turkey is finding a suitable trade name for the business. The name must be unique and must not be offensive. In order to make the company name is unique, the applicant can file for valitadion 3 different names, out of which he or she will choose the appropriate one based on the company’s requirements.
It should be noted that branch offices need to bear the same name as the parent company. Another important requisite for the company to be considered a Turkish resident business is for it to have a locall address. The registered address must be in the city where the company is going to operate.
Business Start-Up Costs in Turkey
Before starting a business in Turkey, people should know the estimated costs of the bureaucratic procedure and other amounts you have to spend for the incorporation, the minimum capital share, fees and sercives. Unlike western European countries, Turkey has low costs for start- up businesses and a stable economic environment which are attractive for foreign investors.
What are the main business strat-up costs in Turkey?
When you open a company in Turkey, there are several costs related to company incorporation;
- Drafting and notarizing the company documents, according to Commercial Code (articles of association,signature declerations, founders’ decleration, power of attorney if needed)
- Paying stamp tax for the necessary papers, the notary services, the tax registration certificate and the certification of the legal books at a public notary
- The minimum capital share which needs to be deposited that may vary according to type of company
- The fee related to the incorporation at the Trade Register and submitting the necessary documents
- The announcement of opening a new company at the Commercial Registry Gazette
The share capital of a company in Turkey
The first cost which needs to be considered when setting up a new business in Turkey is the share capital. It should be noted that The Company Law in Turkey provides a minimum share capital which is mandatory for certain types of business forms, and the authorized share capital which is represented by the amount of money the investor decides he or she needs to start operating.
With respect to the minimum share capital required, a foreign investor must consider the following;
- Sole proprietorships and partnerships (commandite companies) do not need a specific amount to be registered,
- The Turkish private limited liablilty company required at least 10.000 TRY for registration,
- For a public or joint stock company, the law requires at least 50.000 TRY for incorporation,
- Foreign companies needs to share capital when registering branch offices in Turkey.
If a foreign company decides to register a subsidiary, it must consider the share capital requirements for a private or public limited liability company, depending on the chosen structure. Considering most investors choose to register private limited liability companies in Turkey, it should be noted that only 0.04 % of the share capital must be deposited upon incorporation.
What are the company registration costs in Turkey?
One of the most important cost associated with doing business in Turkey is the registration cost, which can be broken down into:
- The preparation of the incorporation documents, which will imply the drafting and notary fees
- The reservation and approval of the trade name of the new company which implies no cost
- The registration fee of the company – this fee depends on type of business from chosen
- The fee for publishing the company’s Articles of Association in the official Gazette
- The fee for recording the company’s Articles of Association with the Turkish Trade Register
- The start-up notice fee, the manager’s signature registration fee and the annual Chamber of Commerce membership fee,
- The fee related to obtaining the list with the authorized signatures of the managers,
- The fees for obtaining the workplace opening and operation permits.
Advantages of investing in Turkey
Turkey is a great country for opening a small company and when you do not have a big amount to invest, but you want to take advantage of a great opportunity that may appear at a time. You can also take advantage of the weak competition and the emerging economic market and the appetite of the consumers for spending money on new products and services.
Other important advantages are the low costs for the workforce that is well trained and skilled and the cost with with suppliers. The wages are very low especially for young people who are university graduates compared to those in western Europe.