The two main types of legal entities that a foreign investor may incorporate when investing in Turkiye are joint stock companies (“JSC”) and limited companies (“LC”). A summary of advantages and disadvantages of these two entities are provided below.

Before going into the differences, it is not worthy to mention that both types of entities are limited liability companies and the liability of shareholders for obligations of either a JSC or a LC is limited to their capital commitment, except for certain obligations of a LC to the government, as discussed below.  The following are some of the important differences between a JSC and a LC:

1. Both JSCs and LCs can be established with one or more shareholders. An LC may not have more than fifty shareholders; however this maximum does not apply to a JSC.  Neither a JSC nor a LC require any Turkish shareholders (i.e., they may be 100% foreign owned).
2. The minimum capital required for a LC is TL 10,000 and TL 50,000 for a JSC.
3. In JSCs, ¼ of the share capital shall be paid in prior to the registration of the company and the remaining amount shall be paid in within 24 months following the registration. In order to evidence such payment, the founders are obliged to present a document issued by the bank evidencing the deposit. Thus, before registration of the company with the Trade Registry, a bank account must be opened for the company. However, in LCs, the entire capital in cash must be paid immediately as of the registration of the company.
4. A JSC is managed by its Board of Directors and a LC does not have a Board of Directors but is managed by a manager or a Board of Managers. Board of Directors’ members do not have to be shareholders of the JSC. However, at least one shareholder in a LC must be a manager.
5. Shareholders of a JSC are liable only for the amount of the capital contributed by such shareholders. On the other hand, shareholders of a LC, unlike JSCs, may be liable for amounts owed by the company to government authorities for taxes, duties, levies and charges without any limitation in proportion to their capital contribution if the company is unable to make the required payments.
6. Provisions regarding rights of first refusal, put and call options or other restrictions with respect to share acquisitions are not enumerated among the exhaustive list of issues which may be covered in the Articles of Association of JSC and LC. Thus, these types of provisions may not be allowed to be set forth in the Articles of Association.

The JSC is specifically preferred where shareholders with potentially conflicting interests come together, such as in a joint-venture.  In addition, a JSC is the only possible option where a public offering of securities in anticipated. Further, JSC structure is by far more workable with respect to any type of restructuring. While JSC is by far the more common choice; the LC may be preferable when the primary objective is to establish a fully-owned subsidiary with minimum capital and administrative requirements.

Please do not hesitate to contact us, should you have further queries regarding the company establishment procedures.

Acquisition of Turkish citizenship is regulated in two ways: at birth or by later acquisition. Turkey has not adopted the right to acquire citizenship based on birth place. Therefore, being born in Turkey will not provide any right in terms of citizenship. Citizenship at birth is based on kinship. A person may be a Turkish citizen at birth only if one of his/her parents is a Turkish citizen.

The second way to obtain a Turkish citizenship is to make an investment in Turkey, through one of the following methods.

• Foreigners who are confirmed to have invested a fixed capital of minimum USD 500,000 by the Ministry of Industry and Technology,
• Foreigners who are confirmed to have purchased real estate worth minimum USD 400,000 or promised to purchase a real estate with floor ownership or floor easement corresponding to a minimum USD 400,000 or same amount equivalent to Turkish Lira with a sale contract certified by notary public and annotation of refusal of sale for three years added to the records of the title deed registry by the Ministry of Environment and Urbanization,
• Foreigners who are confirmed to have created employment for at least 50 people by the Ministry of Family, Labour and Social Services,
• Foreigners who are confirmed to have deposited minimum USD 500,000 or an equivalent of the same to Turkish Lira in a bank that operates in Turkey by the Banking Regulation and Supervision Agency provided that it will be kept in the account for three years,
• Foreigners who are confirmed to have purchased and held for three years real estate investment fund participation shares or venture capital investment fund participation shares worth minimum USD 500,000 by Capital Markets Board,
• Foreigners who are confirmed to have purchased state borrowing instruments worth minimum USD 500,000 on the condition of holding them for three years by the Ministry of Treasury and Finance, may apply for exceptional Turkish citizenship.

Depending on the workload of the relevant authorities, the whole process will take an a approximate period of 3 to 4 months and the applicant shall visit the relevant authorities in person 2 times during the process.

However, foreigners who intend to extend their stay in Turkey after the time limit specified in their visa or the ones who require a visa exemption for their entry and exit into or from Turkey, without an investment stated above, may consider obtaining a residence permit instead of citizenship.

Obtainment of a residence permit in Turkey is addressed in another article by Kutadgu & Arsın.

Please do not hesitate to contact us, should you have further queries regarding the obtainment of a Turkish citizenship or a residence permit in Turkey.

Foreigners who intend to extend their stay in Turkey after the time limit specified in their visa or the ones who require a visa exemption for their entry and exit into or from Turkey must obtain a residence permit.

There exist many different types of residence permit from short term residence permits to long term residence permits. However, the most common permits applied by the foreigners is the short term one. For short-term residence permits, foreigners who own real estate in Turkey or intend to make business connections or establish a business in Turkey must provide the necessary documentation to the relevant Provincial Directorate of Migration Management after submitting an application through the e-residence system.

In principle, short-term residence permits are issued for a maximum of 2 years. However, foreigners who intend to invest in Turkey in the amounts and scopes determined by the Council of Ministers, may be granted up to a 5-year short-term residence permit along with their spouse and children. Furthermore, these investors may also consider applying for acquisition of Turkish citizenship or a long-term residence permit.

Obtainment of a Turkish citizenship is addressed in another article by Kutadgu & Arsın.

Please do not hesitate to contact us, should you have further queries regarding the obtainment of a residence permit in Turkey or Turkish citizenship.

Pursuant to Article 12 of the Turkish Code of Obligations, validity of a contract is not subject to a specific form, unless otherwise provided by law, Where the law requires a specific form for a type of contract, principally it is a validity condition. A contract shall be considered void if not concluded in the form required by law.

Further, where the law stipulates a contract shall be concluded in writing, it must be undersigned by all parties to such agreement. Unless otherwise specified under the law; undersigned letters, telegrams the original copies of which are signed by the liable parties, confirmed facsimiles or other communication tools or documents sent via secure electronic signatures, shall also deemed to be contracts in written form.

Please do not hesitate to contact us, should you have further queries regarding the validity of contract provisions under specific laws and regulations.