Incorporation in Turkey: A Step-by-Step Guide and Legal Procedure

In the Turkish economy, joint stock companies are undoubtedly the most preferred type of company, especially for large-scale investments and corporate structures. The potential for opening up to capital markets, limited liability of shareholders, and a structure in line with corporate governance principles make joint stock companies attractive for entrepreneurs and investors. However, the establishment of this structure is subject to a detailed and rigorous procedure determined by the Turkish Commercial Code (TCC).

In this article, we will cover from A to Z the requirements for establishing a joint stock company in Turkey, the steps to be followed and the critical legal points to be considered during the establishment process.

A joint stock company is a capital company whose capital is fixed and divided into shares, which is liable for its debts only with its assets, and where the liability of the shareholders is limited to the capital shares they have subscribed.

The following key elements need to be clarified before starting the establishment procedure.

1. Founders:

Joint stock companies may be established with a single founding partner (natural or legal person). There is no upper limit on the number of founders.

2. Minimum Capital:

Pursuant to the TCC, the minimum initial capital for joint stock companies is TL 250,000. For non-public joint stock companies accepting the authorized capital system, the minimum initial capital may be TRY 500,000. At least one quarter (25%) of this capital must be deposited in the bank before registration. The remaining portion can be paid within 24 months following the registration.

3. Company Title:

The title of the company must include the phrase "Joint Stock Company" and a phrase indicating the company's field of activity (e.g. "construction", "tourism", "technology"). The title must not be similar enough to be confused with a title used by another company.

4. Field of Activity:

The areas in which the company will operate must be clearly and explicitly stated in the articles of association. Joint stock companies may be established for any economic purpose and subject not prohibited by law.

5. Company Headquarters:

The address of the legal headquarters of the company must be clearly identified. This address is important as it will be considered the notification address.

Step 1: Preparation of the Articles of Association

The articles of association, which is the basis of the establishment, is a document that reflects the will of the founders and is the constitution of the company. It is prepared through MERSIS (Central Registry Registration System) and must include the following mandatory elements:

Step 2: Notarization of Documents and MERSIS Transactions

The articles of association shall be signed by the founders and their signatures shall be certified by a notary public. In addition, the signature circulars of the members of the board of directors are also issued by a notary public. This entire process is carried out through the MERSIS system and the necessary information and documents are uploaded to the system.

Step 3: Blocking the Capital to the Bank

At least 25% of the committed cash capital shall be deposited into a special bank account to be opened in the name of the company being established. The bank issues a "blocking letter" indicating that this payment has been made. This letter is one of the most important documents to be submitted to the trade registry office during the registration application.

Step 4: Competition Authority Share Payment

The amount of four per ten thousand (0.04%) of the total capital shall be deposited into the bank account of the Competition Authority and the receipt shall be attached to the registration documents.

Step 5: Trade Registry Registration and Announcement

After all necessary documents (notarized articles of association, bank blocking letter, competition authority receipt, chamber registration declaration, signature circular, etc.) are prepared, a registration application is made to the Trade Registry Directorate where the company headquarters is located. Upon registration, the company becomes a legal entity. The registration decision is also announced in the Turkish Trade Registry Gazette.

The process does not end after the registration is completed. In order for the company to become operational, the following steps must also be taken:

Establishing a joint stock company is a comprehensive process that requires detailed preparation and knowledge of legal procedures. It is vital that every step to be taken is in compliance with the law in order to avoid legal and financial problems that may arise in the future. In order to avoid making mistakes, especially at critical stages such as drafting the articles of association and fulfilling capital commitments, obtaining professional legal advice from the beginning of the process is the most solid step to take for the future of your investment and your enterprise.