The legal framework governing company formation in Turkey permits international investors to establish and own Turkish companies on substantially the same basis as domestic investors. A Turkish partner is not ordinarily required and full foreign ownership may be adopted in most sectors. The apparent simplicity of registration should not, however, be confused with the wider legal work required for a sound investment. The decisive questions arise before filing. The form of presence, capital and management rights must be structured. The business must be reviewed for licences and ownership restrictions. Banking, tax, employment and contractual arrangements must also be aligned with the investment. Incorporation is one element of a wider market entry process. Registration may be rapid, while a defective governance structure may remain in place until financing, a dispute or an exit exposes it.

This publication considers the principal legal issues that should be addressed by a foreign investor establishing, funding, operating or acquiring a business in Turkey. It is intended as a corporate and transactional analysis. Individual investments should be assessed in light of the investor’s jurisdiction, sector, ownership structure and long term objectives.

1. The Legal Framework for Foreign Investment in Turkey

The legal framework for company formation in Turkey and foreign investment is principally established by the Foreign Direct Investment Law, the Turkish Commercial Code and the legislation applicable to the relevant sector. Under the general foreign investment regime, international investors are afforded treatment equivalent to that granted to domestic investors, subject to international agreements and special legislation. This framework allows an investment to be made through the incorporation of a new company, the acquisition of shares in an existing company, the establishment of a branch or, where commercial activity will not be conducted, the opening of a liaison office. Capital contributions may be made in cash or, where the statutory conditions are satisfied, in kind. Net profits, dividends, proceeds arising from a sale or liquidation, licence fees and payments under foreign loans may generally be transferred abroad through banks or financial institutions.

The general principle of equal treatment does not remove sector specific restrictions. Activities in banking, insurance, payment services, capital markets, energy, civil aviation, maritime transport, broadcasting, education, health and certain other regulated fields may be made subject to licences, minimum capital requirements, local establishment requirements or restrictions concerning ownership and management. A regulatory analysis should therefore be completed before the corporate purpose is drafted and before commitments are made to landlords, employees, suppliers or transaction counterparties.

2. Selecting the Appropriate Form of Market Entry

The appropriate structure is determined by the activity, duration, tax position, liability, governance and exit strategy. A subsidiary is usually selected for a lasting operational presence. A branch may be used where the parent will conduct business directly. A liaison office is confined to non commercial functions. An acquisition may be preferred where licences, contracts and operating assets must be obtained together.

A Turkish Subsidiary

A subsidiary is a separate Turkish legal entity. It may be wholly foreign owned unless special legislation provides otherwise. It holds assets, contracts and liabilities in its own name. Legal separation from the parent company permits Turkish operations to be governed, financed and reported through a distinct vehicle. It also facilitates the admission of investors and the transfer of the Turkish business. The separation is not absolute where parent guarantees, intercompany arrangements or management conduct create wider liability or tax consequences.

A Branch Office

A branch has no legal personality separate from its foreign parent. Its business must remain within the parent’s activities and its liabilities are ultimately those of the foreign company. No statutory minimum capital is generally prescribed for an ordinary branch, although an operational budget must be allocated and sectoral rules may require a particular level of funding. A fully authorised representative resident in Turkey must be appointed. The branch must be registered with the trade registry and will be subject to Turkish tax, accounting, employment and regulatory requirements in relation to its activities.

A branch may be efficient where direct participation by the foreign entity is commercially important. It may be less suitable where liability separation, local investment or a future sale is required. The tax treatment of remitted branch profits must also be compared with the taxation of subsidiary dividends.

A Liaison Office

A liaison office requires permission from the Ministry of Industry and Technology. It may not conduct commercial activity or generate income in Turkey and must be funded from abroad. Permitted functions may include market research, representation, coordination, supplier control and technical support within the approved licence. The stated function must reflect the actual activity. Where sales, invoicing or revenue generating services are undertaken, the non commercial character of the office may be challenged. An initial licence may be granted for no more than three years and extension is not automatic.

The Acquisition of an Existing Company

Shares or assets may be acquired instead of a new vehicle. Existing personnel, permits and contracts may thereby be obtained, together with historical exposure. Corporate, tax, employment, litigation, regulatory and contractual risks should be investigated through legal due diligence. Findings should be reflected in the price, closing conditions, warranties, indemnities and security. Competition clearance or sectoral approval may also be required.

Further information on transactional structuring is available in our overview of mergers and acquisitions in Turkey.

3. Limited Liability Company or Joint Stock Company

The limited liability company and joint stock company are most frequently used. Both have legal personality and may be formed by one shareholder. Their governance, transfer rules and public debt exposure differ materially.

The Limited Liability Company

A limited liability company, commonly referred to as an LLC, may have one to fifty shareholders. Its minimum share capital is 50.000-TRY. Capital may be paid within 24 (twenty four) months following registration. The company is managed and represented by one or more managers. At least one shareholder must be vested with management and representation authority. A legal entity may be appointed as manager, provided that an individual representative is designated.

This form is often suitable for closely held businesses with a straightforward governance structure. It should not be selected merely because its minimum capital is lower. A written share transfer agreement with notarised signatures is generally required and general assembly approval may also be necessary. Shareholders may become personally responsible, in proportion to their capital interests, for public receivables that cannot be collected from an LLC. Managers and legal representatives may face separate liability. This distinction is often decisive.

The Joint Stock Company

A joint stock company, commonly referred to as a JSC, may be incorporated by one or more individual or legal entity shareholders. No general upper limit is imposed on the number of shareholders. Its minimum share capital is 250.000-TRY. The minimum initial capital is 500.000-TRY where the nonpublic registered capital system is adopted. At least one quarter of cash capital must generally be paid before JSC registration and the balance within 24 (twenty four) months. Contributions in kind require valuation and registry procedures.

The JSC is represented by a board with one or more members. A legal entity may serve if an individual representative is registered. Authority may be delegated within the limits of law and the articles. A JSC is ordinarily more suitable for institutional investment, venture capital, differentiated share rights, financing rounds and a potential public offering. Share transfers are generally more flexible, although restrictions may arise under the articles, contracts and sectoral legislation. Our separate publication on establishing a joint stock company in Turkey examines that form in greater detail.

The Factors That Should Determine the Choice

The choice should be made for the life of the investment. Ownership, funding, control, transfer, tax and exit should be examined together. An LLC may be proportionate for an owner managed operation in which transfers will be infrequent. A JSC may be more appropriate where external investment or an eventual share sale is contemplated. Public debt exposure should be considered from the outset. Later conversion is possible but requires further corporate and tax work.

4. Foreign Ownership, Capital and Corporate Governance

Can a Turkish Company Be Wholly Foreign Owned

A Turkish company may ordinarily be wholly owned by foreign investors. Neither Turkish citizenship nor residence is generally required merely to hold shares. A Turkish nominee shareholder should not be introduced where no legal or commercial need exists. Nominee arrangements may create enforceability, beneficial ownership, tax, sanctions and compliance risks. Foreign individuals and legal entities may act as shareholders. A foreign company should ensure that its own constitutional documents and corporate approvals authorise the investment. Any intermediate holding structure should possess commercial and tax substance.

Minimum Capital and Capital Contributions

The statutory minimum should not be treated as recommended operating capital. Capital should reflect the activity, licensing conditions, working capital and banking expectations. An inadequate amount may cause immediate dependence on undocumented shareholder funding. Funding may be provided through equity, shareholder loans, capital advances or other instruments permitted by law. Each method produces different corporate, tax, foreign exchange and repayment consequences. The legal basis, currency, maturity, interest, subordination and conversion rights should be documented before funds are transferred.

For a JSC, at least %25 (twenty five percent) of subscribed cash capital is generally deposited before registration. For an LLC, cash capital may be paid within twenty four months after registration. A contribution in kind requires an asset capable of valuation and transfer, free from attachment or other restrictions, together with an expert valuation and the required registry annotations.

Management and Representation

Ownership and signing authority should not be treated as the same matter. A shareholder may hold economic rights without being authorised to bind the company. Conversely, a manager, board member or commercial representative may be granted extensive authority without holding shares. The articles, internal directives, board or shareholder resolutions and signature arrangements should establish who may bind the company and under what conditions. Joint signature rules, financial limits, reserved matters and approval matrices should be made coherent. Restrictions that are effective only internally may not protect the company against third parties acting in good faith.

In a joint venture, board composition, quorum, veto rights, information rights, financing obligations, deadlock procedures and exit rights should be settled while commercial interests remain aligned.

5. Legal Structuring Before Incorporation

The Corporate Purpose and Regulated Activities

The proposed fields of activity are stated in the articles of association and reflected in registry and tax records. Drafting should be sufficiently broad to accommodate foreseeable operations, but it should remain accurate and consistent with licensing rules. An overbroad purpose may trigger questions from banks and regulators. An unduly narrow purpose may require later amendment. Mandatory wording and licensing conditions should be identified before submission.

Foreign ownership restrictions are exceptional rather than general. They nevertheless remain material in certain areas. The intended sector should be examined under its own legislation instead of relying solely on the general freedom of investment provided by Law No. 4875.

The Articles of Association

The articles form the constitutional basis of the company. They address the trade name, registered office, purpose, capital, shares, governing bodies, representation and other matters required by the Turkish Commercial Code. Standard wording may suffice for a simple wholly owned subsidiary. It is rarely adequate for a joint venture or investor structure. Privileges, nomination rights, enhanced quorums, transfer restrictions and dividend arrangements must remain within Turkish company law. The legal effect of a clause should be considered before commercial language is imported from a foreign precedent. A provision that operates contractually under another legal system may be invalid, ineffective against the company or incapable of registration in Turkey.

Shareholders’ Agreements and Reserved Matters

A shareholders agreement may supplement the articles by regulating governance, funding, transfers, confidentiality, restrictive covenants, deadlock and exit. The agreement does not replace the articles and does not automatically bind the company or third parties in the same manner. The two instruments should be designed together. Rights that must have corporate effect should be reflected in the articles where the law permits. Contractual obligations may be placed in the shareholders agreement with appropriate remedies. The governing law and dispute resolution mechanism should be selected after the enforceability of the principal obligations has been examined. Intercompany services, intellectual property, distribution, supply and financing agreements should reflect operational reality and should be aligned with tax and regulatory requirements. Our contract law practice overview addresses the wider framework.

6. Documents Required from Foreign Investors

Foreign Individual Shareholders

A foreign individual shareholder will ordinarily provide a passport and obtain a Turkish potential tax identification number. Passport copies used for registration must be translated and notarised. An apostille or consular legalisation may be required. A residence permit is not generally required merely to become a shareholder. Residence and work authorisation must be analysed separately where the individual will live or work in Turkey or will undertake an executive role.

Foreign Corporate Shareholders

A foreign corporate shareholder is usually required to provide an up to date certificate showing its existence, registration and authorised signatories. A resolution of its competent body approving the Turkish investment, the articles and the appointment of representatives will also be required. The resolution should identify the investment with sufficient precision and should grant the powers needed for registration and related filings. Where a foreign legal entity will serve on the board or act as manager, the individual appointed to represent it must be identified. The parent company’s own authority rules should be checked before the resolution and power of attorney are signed.

Apostille, Legalisation and Incorporation by Power of Attorney

Documents issued abroad must ordinarily be apostilled where the issuing country is party to the Apostille Convention. Where the Convention does not apply, consular legalisation may be required. Documents must then be translated by a sworn translator and notarised in Turkey, subject to the practice accepted by the relevant registry. Document preparation is often the longest part of incorporation. Names, registration numbers, signatory powers and appointments should be checked before execution. A defect discovered after apostille may require the instrument to be issued again. An appropriately drafted power of attorney allows most incorporation procedures to be completed through counsel. The required powers should be stated expressly. Banking procedures remain subject to the internal compliance policy of the selected bank and may require direct participation by the beneficial owner or authorised signatory.

7. Company Registration in Turkey

MERSIS and the Articles of Association

Trade registry transactions are initiated through the Ministry of Trade’s MERSIS platform. The proposed trade name, corporate purpose, shareholders, capital, management and representation provisions are entered into the system. A unique MERSIS number is assigned to the entity. The trade name must comply with Turkish naming rules and must be distinguishable from registered names. Regulated words and sector references may require approval. Brand availability should be examined separately because registration of a trade name does not create equivalent trademark protection.

Trade Registry Registration

The incorporation documents are filed with the competent Trade Registry Directorate. The articles are signed or verified in the prescribed manner. The Competition Authority contribution corresponding to 0.04 percent of capital is paid. For a JSC, evidence of the required pre registration capital deposit is submitted.

Upon registration, legal personality is acquired and the incorporation is announced in the Turkish Trade Registry Gazette. The registry also certifies the statutory books required at establishment. The official Investment and Finance Office guide describes the principal filing sequence. Registration may be completed on the same day once a complete and acceptable file is presented. That timeframe begins only after foreign documents, translations, tax numbers, address evidence, articles and appointments are ready. Regulatory approvals and banking requirements may extend the overall project considerably.

Tax and Social Security Registration

The trade registry notifies the tax office and the Social Security Institution of incorporation. A tax registration process is then completed and the registered office may be visited for address verification. Employee registrations and workplace notifications must be made before personnel commence work. Statutory accounting books, electronic notifications, invoicing systems and sector specific registrations should be activated in coordination with the company’s accountant. Corporate legal records and accounting records should be reconciled from the beginning, particularly in relation to capital payments, shareholder loans and related party expenses.

8. Corporate Banking and the Movement of Capital

Company registration and bank account opening are separate processes. Registration does not oblige a bank to accept the company as a client. Banks apply their own customer acceptance, sanctions, source of funds, beneficial ownership and risk policies. The ownership chain, business model, expected transaction volumes, principal counterparties and source of initial funds may be examined. Additional documentation may be requested where the shareholder is incorporated in a higher risk jurisdiction, the structure contains several holding entities or the proposed activity involves regulated goods, digital assets, cross border payments or jurisdictions subject to sanctions. The banking file should be planned before incorporation. A business plan, group chart, financial statements, contracts and evidence of the source of funds may be prepared in advance. An authorised signatory may be required to attend in person. Foreign investors may generally transfer dividends, sale proceeds, liquidation proceeds, loan repayments and other qualifying amounts abroad through the banking system. Corporate approvals, tax treatment, withholding obligations and supporting documents must be completed. The freedom to transfer funds does not dispense with banking compliance or tax documentation.

9. Tax and Accounting Considerations

A Turkish resident company is generally taxed on its worldwide income. The standard corporate income tax rate applicable to ordinary business income is currently %25, while different rates and special rules apply to certain financial institutions and qualifying activities. Value added tax, withholding taxes, stamp tax and other transactional taxes may also arise. The tax result should be modelled before the structure is selected. A subsidiary and branch may differ in relation to profit remittance, treaty access and expense allocation. Management, financing and intellectual property arrangements may affect several jurisdictions. Turkey has an extensive network of double taxation treaties. Treaty benefits depend on residence, beneficial ownership, the nature of the payment and the satisfaction of anti abuse rules. A holding company should not be inserted solely on the assumption that a reduced treaty rate will automatically be available. Related party transactions must comply with transfer pricing principles. Fees, royalties, interest and cost allocations should be supported by agreements, commercial evidence and a pricing analysis.

The scope of incentives depends on the sector, location, scale and nature of the investment. Technology development zones, research and development activities, free zones, organised industrial zones, investment incentive certificates and service export regimes may provide material benefits where their conditions are met. Current guidance should be obtained from the Revenue Administration and the competent investment authorities. Our administrative and tax law overview may also be consulted.

10. Employment, Management and Work Permits

Share ownership does not itself grant a right to work in Turkey. A foreign shareholder, director, manager or employee who will perform work in Turkey may require a work permit. The legal position depends on the person’s role, residence, working pattern and any exemption available under the International Labour Force Law and its secondary legislation. The work permit structure should be planned together with the corporate appointments. A foreign individual may be registered as a shareholder or appointed to a governing body without being resident in Turkey. The performance of executive duties in Turkey is a separate matter.

Applications are examined by the Ministry of Labour and Social Security. Employer capital, turnover, employment and salary criteria may apply and are updated periodically. Special rules may be available for key personnel employed by qualifying foreign direct investments. Current criteria should be checked through the Directorate General of International Labour Force. Employment contracts, payroll, social security, workplace policies, occupational health and safety and termination procedures are governed by mandatory Turkish rules in many respects. Templates prepared for another jurisdiction should not be used without adaptation. Further information may be found in our employment law practice overview.

11. Compliance After Incorporation

Registration creates the company but does not complete its compliance framework. Corporate records, filings, accounting books, meetings, invoices and sectoral obligations must thereafter be maintained.

Beneficial Ownership and Corporate Records

Beneficial ownership must be reported under the applicable tax and anti money laundering framework. Banks may impose further verification. Ownership changes should be assessed promptly. Foreign invested companies and branches must also submit the prescribed activity, capital and share transfer information through the electronic foreign investment reporting system within the applicable reporting periods. Corporate decisions must be documented in the required form. Share ledgers, board records and authority documents should correspond with the current structure. Group instructions should be translated into valid corporate action.

Data Protection and Employment Compliance

Personal data processing is governed by the Law on the Protection of Personal Data. Privacy notices, retention rules, processing agreements and cross border transfer mechanisms may be required. Group policies based on the European Union General Data Protection Regulation may provide a useful foundation but do not by themselves establish compliance with Turkish law. Local requirements and decisions of the Personal Data Protection Authority must be addressed. Our personal data protection law practice page provides an outline of the relevant work.

Commercial Contracts and Competition Law

Commercial contracts should be adapted to Turkish mandatory law and enforcement practice. A foreign governing law does not necessarily displace overriding Turkish provisions. Standard terms must be incorporated effectively.

Competition law applies to agreements, commercial conduct and transactions that affect Turkish markets. Exclusive arrangements, resale restrictions, information exchanges and non compete obligations should be reviewed. Acquisitions and joint ventures may require notification where the applicable turnover thresholds and control tests are met. Compliance responsibilities should be allocated within management and supported by authority, training and reporting procedures.

12. Funding, Profit Distribution and Exit Planning

The investment should be structured with both entry and exit in view. Capital contributions provide equity strength but cannot be repaid as freely as ordinary debt. Shareholder loans provide contractual repayment rights but raise interest, withholding, thin capitalisation, transfer pricing and foreign exchange questions. Capital advances should be documented and converted or repaid in accordance with a defined legal basis. Repeated transfers recorded ambiguously in the accounts may create disputes concerning whether the funds constitute debt, equity or an informal contribution.

Dividends may be distributed only from legally distributable profits and reserves after the required corporate approvals have been obtained. Withholding tax may apply, subject to domestic law and an applicable treaty. Interim dividends are subject to a separate statutory regime. Exit may be implemented through a transfer of shares, an asset sale, merger, liquidation or another restructuring. The tax consequences vary according to the seller, company type, form of the shares, holding period and treaty position. Our publication on the taxation of share transfers in Turkish companies considers these distinctions. Transfer restrictions, preemption rights, tag rights, drag rights, call and put options and valuation mechanisms should be agreed before the parties’ interests diverge. Their treatment under Turkish company law, contract law and tax law must be assessed as a whole.

13. Liability for Company Debts

Private Law Debts

A capital company is responsible for its contractual and private law debts with its own assets. Shareholders are generally required to satisfy their subscribed capital obligations and are not liable for ordinary company debts solely because they hold shares. This principle does not protect a shareholder that has guaranteed or assumed a debt, committed a tort or abused the corporate form. Group communications should not create unintended representations concerning liability. Managers and directors may be liable where duties imposed by law or the articles are breached through fault. Capital preservation, related party transactions, tax and insolvency require particular attention.

Public Debts and Management Liability

Public receivables require a separate analysis. Shareholders of a limited liability company may be held personally liable, in proportion to their capital interests, for public debts that cannot be collected from the company. Transferors and transferees may also face statutory exposure in relation to periods connected with a share transfer.

JSC shareholders are not ordinarily liable for public debts merely by holding shares. Liability may arise where a shareholder also acts as a legal representative or responsible board member. Registry records, delegation, signing authority and actual conduct may be examined. Resignation or transfer should be completed through the required corporate and registry steps, with evidence retained for historic periods.

14. Acquiring an Existing Turkish Company

Acquisition may offer speed but should not be presumed to be safer than new incorporation. A company carries its historical obligations even where its shares change hands. Tax assessments, employee claims, unpaid social security liabilities, defective permits, litigation, guarantees and non compliant data processing may remain with the target. The scope of due diligence should reflect the target’s sector and risk profile. Corporate records, ownership, capital, contracts, financing, employment, intellectual property, licences, litigation and compliance should ordinarily be reviewed. Findings should be addressed through price, conditions precedent, indemnities, escrow or other effective protection.

The legal transfer mechanics differ between LLC and JSC shares. Regulatory approvals, competition clearance and foreign investment reporting may also be relevant. The acquisition agreement, corporate approvals and closing steps should be planned as one sequence.

15. Investment Incentives and the 2026 Framework

Investment incentives should be considered during location and structure selection, not after capital expenditure has been committed. The available regime may depend on the sector, region, investment amount, imported machinery, employment, research activity, export model and the investor’s proposed legal form. Law No. 7582, published on 04.06.2026, introduced significant tax and investment measures. A qualified service centre regime was added to the Foreign Direct Investment Law for capital companies that provide specified services to affiliated companies or corporate groups operating in at least three countries and derive at least eighty percent of annual revenue from foreign group companies. The principal amendments are examined separately in our publication on tax and investment legislation under Law No. 7582.

Subject to detailed statutory conditions, 95 percent of qualifying foreign income may be deducted where it is transferred to Turkey within the prescribed period. Employment tax relief may also be available for qualifying personnel. The regime is particularly relevant to multinational groups considering regional finance, treasury, risk, technology, data, management, human resources and coordination functions in Turkey.

The classification should not be assumed from the name or group function. Corporate form, group geography, service scope, revenue composition, personnel roles, location and transfer of income must be tested against the legislation and implementing rules. Advice on Turkish law and domestic activities remains subject to the requirements of the Attorneyship Law. The same legislation introduced further measures concerning cross border services, transit trade and new residents. A 12.5 percent rate for qualifying manufacturing and agricultural production income will apply from the 2027 tax period. Effective dates differ and each incentive should be reviewed when the investment decision is made.

16. Governing Law and Dispute Resolution

The incorporation, internal governance and dissolution of a Turkish company are governed by Turkish law. Commercial agreements may permit a foreign governing law, subject to mandatory rules and conflict of laws principles. Jurisdiction and enforcement should be assessed before a dispute clause is selected. A judgment obtained abroad may require recognition or enforcement proceedings in Turkey. Reciprocity, finality, proper service, public policy and the absence of exclusive Turkish jurisdiction may become relevant.

The applicable framework is examined in our publication on the enforcement of foreign judgments and arbitral awards in Turkey. Arbitration may be suitable for shareholder, investment, financing and complex commercial disputes. The seat, institution, language, number of arbitrators and scope of the clause should be drafted coherently. An arbitration clause should not be copied from an unrelated transaction. Interim relief, evidence and enforcement strategy should also be considered. Assets, counterparties and performance may be located in different jurisdictions. The dispute clause should support the transaction rather than merely identify a forum.

17. A Legally Sound Implementation Sequence

The process should begin with a written definition of the business, ownership, funding and management model. The activity should then be screened for licences and foreign ownership restrictions. The subsidiary, branch, liaison office and acquisition alternatives should be compared before the LLC or JSC form is selected. The articles, shareholders agreement and authority structure should then be prepared. Foreign documents should be executed only after names, signatories and powers have been confirmed.

Registration should be coordinated with capital, address, tax and statutory book requirements. Banking, accounting, payroll and work permit work may proceed on a controlled parallel timetable. A closing file should then be prepared with the registry documents, articles, resolutions, authorities, share records, capital evidence and compliance calendar.

18. Conclusion

Company formation in Turkey is governed by an investor friendly framework under which full foreign ownership is generally permitted and registration can be completed efficiently. The quality of an investment structure is nevertheless determined by decisions extending far beyond the registry filing. Entity selection, permissions, capital, governance, banking, tax, employment, contracts, funding and exit form a single legal architecture. A structure designed only for speed may fail when financing, investment or sale is pursued.

The objective should be a durable platform through which the investment may be operated, financed and transferred with legal certainty.

Çetin Attorney Partnership advises international investors and foreign owned companies on market entry, company establishment, corporate governance, investment structuring, contracts, regulatory compliance and transactions in Turkey. Further information may be found in our commercial and company law and foreign investment legal services pages.

This publication provides general information as of 15.09.2026. It does not constitute legal or tax advice. The applicable rules and administrative practice should be verified in light of the facts of each investment.