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From the Ministry of
Industry and Trade:
Communique Concerning The Principles of Procedures for the
Establishment and Amendments in Articles of Associations of
Joint Stock Companies and Limited Liability Companies
(Domestic
Trade 2003/3)
Objective
Article 1 – The objective of
this Communique is to designate the principles and procedures for
the establishment of joints stock companies and limited liability
companies and the amendments in the articles of association of these,
in line with the amendments made in Turkish Commercial Code by Law
4884 that came into effect and published in the Offical Gazette No.:
25141, on 17 June 2003.
Basis
Article 2 – This Communique
has been prepared in accordance with Article 274 of Turkish
Commercial Code (TCC), Article 33 of Law 3143 and Article 2 of Law
4884.
Joints Stock Companies
Article 3 – The minimum
capital required for the establishment of a joint stock company is
TRL 50 billion and there should be at least 5 founding shareholders,
provided that there is no adverse provision in the special laws
associated.
A) Establishment
Procedures
The establishment steps of
joints stock companies, notwitstanding the special provisions of TCC
and Capital Markets Law with regard to the gradual establishment of
joint stock companies, are described as below:
a) The Preparation of
the Articles of Association and its Notarization
It is obligatory that the
articles of association of the company should contain the subjects
stipulated in Article 279 of TCC, that it should be put down in
written form and that it should be notarized after being signed by
the founders.
The following points have,
particularly, to be taken into account while preparing the articles
of association:
aa. Founders
The names, surnames and
addresses of the founders, and in case there are citizens of foreign
countries among founders, the citizenship of these founder(s) have
to be listed.
bb.Trade Name
The trade name has to be
determined in accordance with Article 45 of TCC so as to indicate
the business activity of the company. It is obligatory that the
trade name has to incorporate the phrasing; “Anonim Şirketi (Joint
Stock Company).” In case it contains the name and surname of the
real person, the phrasing that indicates the company type cannot be
abbreviated or displayed in symbols.
Since trade names of legal
entities are protected all over Turkey, the designated trade name
should not have been registered beforehand at any registry office.
The trade name should not
carry an essence to mislead third parties with regard to the scope
of activities, significance or financial status of the company, nor
should contradict facts and public order.
The words “Türk, Türkiye,
Cumhuriyet and Milli” can only be used in trade names provided that
there is a decree of Council of Ministers approving such usage.
The trade name has to be in
Turkish language. Any fictitious names present in the trade name
have to be in Turkish language as well. The presence of foreign
words in the trade name of a company may be permitted in cases,
where these words do not contradict the law, the national, cultural
and historical benefits; the name or brand promoting the goods or
services constituting the business activity of the company is in a
foreign language or there is/are foreign shareholder/s in the
company.
cc. Headquarter
The name of the province and
district of the province in which the headquarter of the company is
located, has to be specified in the articles of association.
Furthermore, the open address of the company has to be written in
the articles of association. Thus, the article denoting the
headquarter of the company should read as;
“The headquarter of the
company is located in ………. . It’s address is; ……………. . In case of a
change of address, the new address has to be registered at the Trade
Registry and announced in the Trade Registry Gazette. Any notice
served to the registered and announced address is deemed to have
been served to the company. In case the company leaves its
registered and announced address and does not register its new
address within the stipulated period, the case is considered as the
cause for termination.”
It is not obligatory to make
amendments in the articles of association only for a change of
address if the new address is within the same registry district.
However, an amendment in the articles of association is necessary if
the new address is located at a registry center different than the
previous one.
dd.Objective and Field of
Activity
The field of activity in
which the company is planning to operate should not have been
prohibited by Article 271 of TCC.
A specific field of activity
in which the company will actually be operating should be written in
the articles of association, at least on sectoral basis. The
articles of association should not be written so as to cover all
kinds of field of activity. Objectives and subjects of activity that
can be written in the articles of association are limited with the
subject specifed in the trade name of the company.
ee. Capital
The
capital of the company should be minimum TRL 50 billion.
In accordance with Articles
279 and 300 of TCC, it is obligatory that the capital amount, the
nominal value of each share and the method and terms concerning the
payment of the capital shall be paid, has to be specified in the
articles of association.
Accordingly, notwithstanding
the provisions of special laws, it must be written in the capital
clause of the articles of association of the company that the
capital has been fully committed - free of any collusion - and that
1/4th of the cash capital has been fully paid up or that it will be
paid up latest within three months following the establishment of
the company, and that the remaining portion will be paid up latest
within three years.
Capital clause of the
articles of association of companies which are obligated by special
laws for payment of the whole or a fraction larger than 1/4th of
their capital will be arranged accordingly.
In the event that any rights,
movable and immovable assets are being subscribed as capital at
company establishment stage, this commitment has to be fulfilled
latest within three months following the registration date of the
company. In case the goods and rights put in as capital are
registered at a special registry (such as land registry office,
registry of ships, traffic registry, industrial property registry),
these have to be registered on the behalf of the company, latest
within three months of establishment.
b) The Registration of
the Company at the Trade Registry and its Announcement
The articles of association
are first notarized and then registered at the Trade Registry Office
where the company headquarter is located in or where the location of
headquarter is associated with, within 15 days after notarization.
The company becomes a legal entity by this registry. Items that
require announcement after registry are announced in the Trade
Registry Gazette. Documents indicated in Annex 1 of this Communique
have to be attached to the registration application.
B) Procedures for
Amendments in Articles of Association
The steps for making
amendments in the articles of association of joint stock companies,
with the exception of those specified in Article 5 of this
Communique, are described below:
a) Board Resolution
for Amendments in Articles of Association and the Preparation of the
Amendment Text
aa. In General
The board of directors
resolves the amendments to be made in the articles of association,
in compliance with the procedures and principles stipulated by the
TCC and the articles of association; the amendment text is prepared
so as to include the previous and new versions of the related
article/s.
The amendment texts are
signed by the company officials authorized to represent the company.
bb. Increase of Capital
With regard to the
amendments to be made in articles of association involving capital
increase, notwithstanding the provisions of special laws, it must be
written in the capital clause of the amended text that the previous
capital has been fully paid up and the that capital increase has
been fully committed - free of any collusion - and that 1/4th of the
capital in cash has been fully paid up or at this portion capital
increase will be paid up latest within three months following the
registration of the capital increase and the remaining will be paid
up latest within three years.
Amendments in the capital
clause of the articles of association of companies which are
obligated by special laws for payment of the whole or a fraction
larger than 1/4th of their capital increases will be arranged
accordingly.
The capital in cash portion
of the subscribed capital increase that is specified in the articles
of association of the company, has to be deposited in a company
account opened at a bank or a private finance institution before the
registration of the capital increase.
In the event that any rights,
movable and immovable assets are being subscribed for capital
increase, this commitment has to be fulfilled latest within three
months following the registration date of the capital increase. In
case the goods and rights put in as capital are registered at a
special registry (such as land registry office, registry of ships,
traffic registry, industrial property registry), these have to be
registered on the behalf of the company, latest within three months
following the registration date of the capital increase.
b) Review of
Amendments in Articles of Association in Shareholders’ Meeting and
its Resolution
In case the shareholders are
summoned for a meeting for amendments in the articles of association,
the amended text has to be announced and notified to the relevant
persons together with the original text in accordance with Article
368 of TCC and the amendments in the articles of association have to
be resolved in compliance with the principles stipulated by the TCC
and the articles of association.
c) Registry of the
Amendments in Articles of Association at the Trade Registry and its
Announcement
Amendments in the articles
of association, with the exception of increase or reduction of
capital have to be registered at the Trade Registry Office where the
company headquarter is located, within 15 days following the
shareholders’ meeting. In case these amendments violate the rights
of preferential stockholders, this 15-days period starts upon
approval of the shareholders’ resolution by the preferential
stockholders. Documents indicated in Annex 2 of this communique have
to be attached to the registration application for the amendments in
articles of association.
Amendments in the articles
of association for a reduction of capital have to be registered at
the Trade Registry Office within 15 days after finalizing the
transactions specified in Articles 397 and 398 of TCC following the
resolution of the shareholders’ meeting.
Amendments in the articles
of association have to be registered at the Trade Registry Office
within 15 days after finalizing the transactions in capital-in-cash
increases, whereas this 15-days period starts on the date of the
shareholders’ meeting in non-cash capital increases.
When the capital increase
needs some other legal or administrative procedures due to its
special legislation, the 15 days period begins after these
procedures.
With the exception of
publicly held joint stock companies, once the whole capital increase
is subscribed, a list prepared in accordance with the examplar form
given in Annex 5 of this Communique, duly signed by the Company
officials have to be announced in the Trade Registry Gazette
together with the amendment texts, after the registration of the
capital increase.
In case the capital increase
process cannot be achieved, the Trade Registry Office is authorized
to refund the relevant persons for the money deposited at the
special account opened at a bank or a private finance institution
for the subscribed capital shares before the capital increase
process.
Limited Liability
Companies
Article 4- The minimum
capital required for the establishment of a limited liability
company is TRL 5 billion and there should be at least 2 founding
shareholders as real persons or legal entities, provided that there
is no adverse provision in the special laws associated. The number
of the shareholders should not be more than 50.
A- Establishment
Procedures
The establishment steps of
limited liability companies are described below:
a) The Preparation of the
Articles of Association and its Notarization
It is obligatory that the
articles of association of the company should contain the subjects
stipulated in Articles 506 and 511 of TCC, it should be put down in
written form and the signatures of all founders should be notarized.
aa. Founders
The names, surnames and
addresses of the founders, and in case there are citizens of foreign
countries among founders, the citizenship of these founder(s) have
to be listed.
bb. Trade Name
The trade name of the
company has to be determined in accordance with Article 45 of TCC so
as to indicate the business activity of the company. It is
obligatory that the trade name has to incorporate the phrasing; “Limited.”
In case it contains the name and surname of the real person, the
phrasing that indicates the company type cannot be abbreviated or
displayed in symbols.
Since the trade names of
legal entities are protected all over Turkey, the designated trade
name should not have been previously registered at any registry
office.
The trade name should not
carry an essence to mislead third parties with regard to the scope
of activities, significance or financial status of the company, nor
should contradict facts and public order.
The words “Türk, Türkiye,
Cumhuriyet and Milli” can be used in trade names provided that there
is a decree of Council of Ministers approving such usage.
The trade name has to be in
Turkish language. Any fictitious names present in the trade name
have to be in Turkish language as well. The presence of foreign
words in the trade name of a company may be permitted in cases,
where these words do not contradict the law, the national, cultural
and historical benefits; where the name or brand promoting the goods
or services constituting the business activity of the company is in
a foreign language or there is/are foreign shareholder/s in the
company.
cc. Headquarter
The name of the province and
district of the province at which the headquarter of the company is
located, has to be specified in the articles of association.
Furthermore, the open address of the company has to be written in
the articles of association. Thus, the article denoting the
headquarter of the company should read as;
“The headquarter of the
company is located in ………. . It’s address is; ……………. . In case of a
change of address, the new address has to be registered at the
Commercial Registry and announced in the Commercial Registry Gazette.
Any notice served the registered and announced address is deemed to
have been served to the company. In case the company leaves its
registered and announced address and does not register its new
address within the stipulated period, the case is considered as the
cause for termination.”
It is not obligatory to make
amendments in the articles of association only for a change of
address if the new address is within the same registry district.
However, an amendment in the articles of association is necessary if
the new address is located at a registry center different than the
previous one.
dd. Objective and Field
of Activity
The field of activity in
which the company is planning to operate should not have been
prohibited by Article 271 of TCC. (TCC Art. 503)
Limited liability companies
cannot deal in banking and insurance business.
A specific field of activity
in which the company will actually be operating should be written in
the articles of association, at least on sectoral basis. The
articles of association should not be written so as to cover all
kinds of field of activity. Objectives and subjects of activity that
can be written in the articles of association are limited with the
subject specifed in the company title.
ee. Capital
The capital of the company
should be minimum TRL 5 billion. Capital amounts to be put in by
shareholders can be of diverse amounts. Yet, the capital to be
provided by shareholders should be at least TRL 25 million or
multiples of this amount.
In accordance with Articles
506 and 510 of TCC, it is obligatory that the principal capital of
the company, capital amounts subscribed by each shareholder and the
method and terms of how this capital shall be paid has to be
specified in the articles of association.
Accordingly, notwithstanding
the provisions of special laws, it must be written in the capital
clause of the articles of association of the company that the
capital has been fully subscribed - free of any collusion - and that
1/4th of the cash capital has been fully paid up or that it will be
paid up latest within three months following the establishment of
the company and that the remaining portion will be paid up latest
within three years.
Capital clause of the
articles of association of companies which are obligated by special
laws for payment of the whole or a portion larger than 1/4th of
their capital will be arranged accordingly.
In the event that any rights,
movable and immovable assets are being subscribed as capital at
company establishment stage, this commitment has to be fulfilled
latest within three months following the registration date of the
company. In case the goods and rights put in as capital are
registered at a special registry (such as land registry office,
registry of ships, traffic registry, industrial property registry),
these have to be registered on the behalf of the company, latest
within three months of establishment.
b) The Registration of
the Company at the Trade Registry and its Announcement
The articles of association
are first notarized and then registered at the Trade Registry Office
where the company headquarter is located in or where the location of
headquarter is associated with, within 15 days after notarization.
The company becomes a legal entity by this registry. Items that
require announcement after registry are announced in the Trade
Registry Gazette. Documents indicated in Annex 1 of this Communique
have to be attached to the registration application.
B) Procedure for
Amendments in Articles of Association
The steps for making
amendments in the articles of association of limited liability
companies are described below:
a) Resolution of Board
of Shareholders for Amendments in Articles of Association and the
Preparation of the Amendment Text
aa. In General
The board of shareholders
resolves for amendments to be made in the articles of association in
compliance with the procedures and principles stipulated by the TCC
and the articles of association; the amendment text is prepared so
as to include the versions of the previous and new article/s.
bb. Increase of
Capital
With regard
to amendments to be made in articles of association involving
capital increase, notwithstanding the provisions of special laws, it
must be written in the capital clause of the amendement text that
the previous capital has been fully paid up and that the capital
increase have been fully committed - free of any collusion - and
that 1/4th of the cash capital has been paid up or at this portion
the capital increase will be paid up latest within three months
following the registration of the capital increase and the remaining
will be paid up latest within three years.
Amendments in the capital
clause of the articles of association of companies which are
obligated by special laws for payment of the whole or a fraction
larger than 1/4th of their capital increases will be arranged
accordingly.
The cash capital portion of
the subscribed capital increase that is specified in the articles of
association of the company has to be deposited in a company account
opened at a bank or a private finance institution before the
registration of the capital increase.
In the event that any rights,
movable and immovable assets are being subscribed for capital
increase, this commitment has to be fulfilled latest within three
months following the registration date of the capital increase. In
case the goods and rights put in as capital are registered at a
special registry (such as land registry office, registry of ships,
traffic registry, industrial property registry), these have to be
registered on the behalf of the company, latest within three months
following the registration date of the capital increase.
b) Registry of the
Amendments in Articles of Association at the Trade Registry and its
Announcement
Amendments in the articles
of association have to be registered at the Trade Registry Office
where the company headquarter is located, within 15 days following
the date of the resolution of board of shareholders. Documents
indicated in Annex 2 of this communique have to be attached to the
registration application for the amendments in articles of
association.
Amendments in the articles
of association for a reduction of capital have to be registered at
the Trade Registry Office within 15 days after finalizing the
transactions specified in Articles 397 and 398 of TCC.
In case the capital increase
process cannot be achieved, the Trade Registry Office is authorized
to refund the relevant persons for the money deposited at the
special account opened at a bank or a private finance institution
for the subscribed capital shares during the capital increase
process.
Joint Stock
Companies Which are Subject to the Permit of the Ministry of
Industry and Trade for Establishment and Amendment in Their Articles
of Association
Article 5 - Article 273
of TCC as revised by Article 2 of Law 4884 stipulates that,
establishment and amendments in articles of association of banks,
private finance institutions, insurance companies, financial leasing
companies, factoring companies, holding companies, companies
operating foreign currency exchange offices, companies dealing in
public warehousing, publicly held companies subject to the Capital
Markets Law, companies that are founders and operators of free zones
are subject to permit from the Ministry of Industry and Trade.
In order to establish a
company of the type listed above, an application has to be made to
the Ministry (General Directorate of Internal Trade) so as to
receive a permit before registering at the Trade Registry Office. As
for amendments in articles of association this permit has to be
received before the shareholders’ meeting at which the amendments
will be resolved. Other transactions for the establishment of these
companies and amendement in articles of association thereof will be
carried out in accordance with the procedures and principles
specified in Article 3 of this Communique.
Payment of the Capital in
Cash
Article 6 - Payments of shareholders against their capital
subscriptions in cash during the establishment or the capital
increase process have to be made to the accounts opened by the
company at a bank or a private finance institution.
Repealed
Provisions
Article 7- Communique No: “Domestic Trade 1995/1” which was
published in the Official Gazette No: 22373 on 13 August 1995 and
the entire circular authorizing the Provincial Industry and Trade
Directorates for finalizing the establishment transactions of joint
stock companies and limited liability companies and the amendments
in the articles of association thereof have been repealed.
Legislation in Effect
Article 9 – Any issue not regulated by this Communique will be
subject to the provisions of Turkish Commercial Code and the Trade
Registry Regulation.
Effectiveness
Article 9- This Communique comes into effect on the date it is
publishment.
Execution
Article 10 – The provisions of this Communique will be executed by
the Ministry of Industry and Trade.
10 KEY QUESTIONS REGARDING TURKEY'S NEW FOREIGN
DIRECT INVESTMENT LAW
Why Has Turkey
Introduced a New Foreign Direct
Investment Law Now ?
The new Law is an integral part of a broader national
reform program that is laying the foundation for sustainable growth
and development, driven by private investments in a transparent
marketplace fully open to the world and supported by a smaller but
more effective State. To ensure that Turkey’s bold fiscal adjustment
and ambitious structural reforms translate into substantial
investments, the Government of Turkey is focusing on improving the
investment climate as one of the main pillars of its economic
program. In addition to the introduction of a more
investor-friendly new Law, the Government of Turkey has established
by decree an inter-governmental Coordination Committee for the
Improvement of the Investment Climate (YOIKK), composed of
high-level representatives of relevant ministries, the private
sector and NGOs to help remove remaining bureaucratic obstacles to
investment. The Government of Turkey also intends to set up a
well-funded new Investment Promotion Agency simultaneously able to
work inside government and draw on private sector knowledge and
market skills, to carry out a multi-year strategy to promote
investment in Turkey.
What is ‘New’ About the Foreign
Direct Investment Law ?
Key
features of the new Foreign Direct Investment Law include:
·
Freedom to invest by dropping all former FDI-related
screening, approval, share transfer and minimum capital
requirements;
· Reassurance
of existing guarantees to foreign investors of their rights in one
transparent and stable document;
·
Upgrading to accepted international standards for
definitions of ‘foreign investor’ (broadened to include Turkish
national residents abroad and international organisations) and
‘foreign direct investment’ (broadened to include all possible types
of assets); and
·
A policy shift from ex-ante control to a promotion
and facilitation approach with minimal ex-post monitoring to
continuously improve an investor-friendly climate for growth and
development.
What Rights do Foreign Investors Have
Under the New Law ?
The
new Law guarantees national treatment and comprehensive investor
rights. All companies established with
a foreign capital contribution and under the rules of the Turkish
Commercial Code (existing and newly established foreign companies)
are regarded as a Turkish company. Therefore equal treatment both in
rights and responsibilities as stated in the Constitution and other
laws is applicable to all such companies (including national
treatment, a guarantee against expropriation without compensation,
transfer of proceeds, access to real estate and to expatriate
personnel, and international arbitration or any other means of
dispute settlement).
Will Investors be Exempted From Permits Formerly Granted by GDFI?
Yes, previous pre-permits issued by the
Undersecretariat of Treasury’s General Directorate of Foreign
Investment (GDFI) are abolished. However, all foreign companies
established or to be established in Turkey are still responsible for
obtaining those local licences required for a comparable Turkish
company.
Which Permits Formerly Granted by GDFI Will Not be Issued From
Now On ?
·
Company and Branch establishment Pre-Permits
·
Foreign partner participation Pre-Permits
·
Investment Permits
·
Permits regarding changes in field of activity of
foreign companies
·
Permits regarding capital increase or sale of shares
of foreign companies
·
Indirect participation Permits
·
Registrations of license, know-how, technical
assistance and similar agreements
What is New For Establishing a
Company in Turkey for Foreign
Investors ?
Entry
conditions are the same as for comparable local Turkish companies.
· There
is no minimum amount of capital required. It is no longer obligatory
to bring a minimum of $50,000 in share capital.
· Any
form of company included in the Turkish Commercial Code is
acceptable. It is no longer obligatory to establish either a limited
liability company or joint stock company.
Do Foreign Investors Have Access to
Real Estate in Turkey ?
Companies having a legal entity with foreign capital in Turkey have
the same rights to
own or use land as domestic investors. The new Law reassures these
rights.
However, the principle of reciprocity is still valid for foreign
real persons.
Is There a New Regulation for Liaison
Offices ?
No, there are no
additional requirements. The establishment procedure of liaison
offices has not changed.
Is There a New Regulation for Establishment of Branches of
Foreign Companies ?
Yes, pre-permits issued
by General Directorate of Foreign Investment are abolished.
These branches can be established under rules of Turkish Commercial
Code with the permit of Ministry of Industry and Trade.
What will happen to foreign companies
established in Turkey under
the provisions of the previous Law No. 6224?
All companies with foreign
capital established under Law No. 6224 (dated 18 January 1954) are
subject to the new Law, with their previously-granted rights
grandfathered. Therefore they will no longer require any approvals
from GDFI, though they will now have to send yearly information
forms (just like newly-established foreign companies) based on
procedures to be determined by new regulations
For
your inquiries,
please e-mail us at info@ertanoran-lawoffice.com
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