Company Establishment

What is Company Formation in Turkey?

Company formation is the legal process where one or more individuals come together to establish a legal entity to conduct business activities in Turkey. This process must be carried out in accordance with the Turkish Commercial Code (TCC) and other relevant legal regulations. Establishing a company not only gives your business a legal identity but also provides a safer structure by separating your personal assets from potential commercial risks. This way, partners can effectively manage business risks by assuming limited or unlimited liability for company debts. The formation process is officially completed with registration in the trade registry, at which point the company is recognized as a legal entity.

How to Form a Company in Turkey

The company formation process varies depending on the type of company chosen, but it generally follows a clear roadmap with specific stages.

• Determining the Company Type: The first and most critical step is to choose the most suitable company type for your goals, capital structure, and liability preferences. This decision directly impacts the company’s future taxation, liability, and management structure.
• Drafting the Articles of Association: This is the most fundamental legal document, containing the company’s name, address, business activity, capital amount, partners, and share distribution. This document should be expertly prepared by a lawyer or a financial advisor.
• MERSIS Application: The drafted articles of association are uploaded to the Central Registry System (MERSIS) for electronic approval. A MERSIS application is a prerequisite for registration in the trade registry.
• Registration and Trade Registry Procedures: After MERSIS approval, the articles of association and other necessary documents are submitted to the relevant Trade Registry Office. At this stage, all official paperwork is submitted for the company to gain legal personality.
• Tax Office and Social Security Institution (SGK) Registration: After registration, the company’s tax liability begins, and it is registered with the tax office. If the company plans to hire employees, it must also be registered with the SGK.

This complex process should be managed with professional support to avoid any legal errors and prevent unnecessary delays.

Required Documents for Company Formation

Although they vary by company type, the following are the basic documents generally required for the formation process:

• Partners’ identification documents (ID photocopies, notarized passport copies, etc.).
• Company articles of association (notarized).
• Picture of the shareholders.
• Signature declaration under the company name.
• Declaration of founders.
• Rent contract or deed showing the company’s registered address.
• For foreign partners, a notarized translation of the passport and a residence permit (if available).
• Bank receipts proving the payment of necessary fees and expenses.

How Long Does it Take to Form a Company in Turkey?

The duration of the company formation process in Türkiye depends on the chosen company type, the completeness of the documents, and the workload of the Trade Registry Office. However, thanks to modern, digitized processes, this period has been significantly shortened.

• Average Duration: If your documents are complete and correct, the formation of a limited liability company (Ltd. Şti.) or a joint-stock company (A.Ş.) can be completed in an average of 1 to 3 business days. This period includes the MERSIS application, notary procedures, and trade registry registration.
• Factors That Speed Up the Process:
  • Professional Consultancy: Working with a lawyer or a financial advisor prevents document errors and ensures the process is completed as quickly as possible.
  • Standardized Articles of Association: Using a standard form of articles of association can accelerate the notary and MERSIS approval processes.
  • Digital Procedures: Online applications through MERSIS significantly shorten the process compared to physical document tracking.
• Factors That Slow Down the Process:
  • Missing or Incorrect Documents: This is the most common problem. A missing signature or an incorrect document can cause the entire process to start over.
  • Foreign Partnership: For companies with foreign partners, the process may take a bit longer due to additional required documents like notarized passport translations and apostille approvals.
  • Capital Blocking: For joint-stock companies, blocking a portion of the capital in a bank and submitting the receipt can take additional time.

In conclusion, while the duration of the company formation process varies based on your personal effort and professional support, it is typically a process aimed to be completed within a few days to a week.

Types of Company Formation in Turkey

The most preferred company types in Turkey are divided into two main groups based on their liability and structural differences.

Joint-Stock Company (A.Ş.) Formation

A joint-stock company is the most common and flexible type of capital company. It requires at least one founder and a capital of 250,000 TL for establishment. The partners’ liability is limited to the shares they own, and they are not personally liable for company debts. The transfer of shares is free, and the company has high potential for raising funds by going public.

• Documents for a Joint-Stock Company:
  • Declaration of founders.
  • Company articles of association.
  • Bank receipt showing that at least 25% of the capital has been deposited.
  • Partners’ identification information and photos.
  • Documents related to the company’s address and business activity.

Limited Liability Company (Ltd. Şti.) Formation

A limited liability company has a less complex structure than a joint-stock company and is generally preferred for small and medium-sized enterprises. It can be established with at least one founder and a capital of 50,000 TL. The partners’ liability is limited to the capital they have committed. Share transfers are done in the presence of a notary and must be registered with the trade registry.

• Documents for a Limited Liability Company:
  • Partners’ ID photocopies (if they are foreigner notary approved passport translation).
  • Company articles of association.
  • Signature declarations under the company name (or a wet-ink signed power of attorney given to the lawyer).
  • Receipts proving the payment of formation fees.
  • Rent contract or deed photocopy showing the company’s address.

How to Form a Company with Foreign Partners in Turkey

Forming a company with foreign partners is similar to forming one with Turkish partners, but it also involves international legal procedures. Passports of foreign nationals must be submitted with notarized Turkish translations. If the partner does not reside in Türkiye, documents obtained from the relevant authorities in their country must have an apostille approval (an international certification). The formation process is secured by legal regulations that protect the rights of foreign investors.

Company Formation Costs in Turkey

The cost of company formation is not a fixed amount but depends on a number of variable factors. The main cost items are:

• Notary Fees: Notarization fees for documents such as the articles of association, signature declaration, and power of attorney.
• Trade Registry Fee: The registration fee is determined based on the company’s capital.
• Competition Authority Share: A legal fee of four per thousand of the company’s capital.
• Financial Advisor and Lawyer Fees: The consultancy and service fee paid for the professional management of the formation process.
• Other Expenses: Trade chamber registration, tax plate, and other official document costs.

MERSIS Company Formation in Turkey

MERSIS is a system that digitizes the company formation process and collects data in a central database. The formation process begins with an online application through MERSIS. The articles of association and partner information are entered into the system. MERSIS checks the compliance of the entered information with the Trade Registry Regulation and gives preliminary approval. Following this approval, the necessary documents, along with the application number obtained from the system, are submitted to the relevant Trade Registry Office to complete the registration. This method minimizes document errors and speeds up the process.

Power of Attorney Sample for Company Formation in Turkey

It is a common practice to have the company formation procedures carried out by a representative (usually a lawyer or financial advisor). In this case, a power of attorney, which is a special authorization document, must be obtained from a notary.

SAMPLE POWER OF ATTORNEY TEXT

“I, the undersigned [Full Name] [ID Number], residing at [Address], have appointed [Lawyer/Financial Advisor’s Name] [Bar Registration No] [ID Number] as my attorney on my own behalf and on behalf of the [Company Type] company I am founding. My attorney is authorized to carry out all the procedures at the relevant institutions to complete our company’s formation process, with all the powers listed below:

Powers:

• Drafting and signing the company’s articles of association.
• Making all applications related to the trade name and trademark.
• Making the company formation application through MERSIS.
• Preparing all necessary official documents and submitting them to the relevant institutions.
• Following the registration and announcement procedures at the Trade Registry Office.
• Managing tax registration and other registry procedures at the tax office and other official institutions.
• Opening bank accounts and performing deposit/withdrawal transactions on behalf of the company(optional).”

E-Commerce Company Formation in Turkey

E-commerce is a modern business model that allows selling products or services online without a physical store. However, to conduct e-commerce activities legally and reliably, you must establish a company. Commercial activities conducted without a company are in violation of the Tax Procedure Law and the Turkish Commercial Code, which can lead to serious penalties.

Why You Must Form a Company for E-commerce

• Legal Reliability: A corporate structure increases your customers’ trust. You will act in compliance with the law regarding invoicing, managing return processes, and protecting consumer rights.
• Tax Obligations: By forming a company, you become a taxpayer and legally declare your income. This prevents problems during future tax audits.
• Credit and Investment Opportunities: A corporate identity provides a significant advantage when applying for bank loans or seeking funding from investors.
• Trademark Registration: You must have a company to legally register the name of your e-commerce site, its logo, or other commercial elements.

Most Preferred Company Types for E-commerce

• Sole Proprietorship: This is the easiest and most cost-effective company type to establish. It’s ideal for a one-person operation. However, you are personally and without limitation liable for company debts.
• Limited Liability Company (Ltd. Şti.): This is the most preferred company type for e-commerce. It is safer in terms of risk management because the partners’ liability is limited to their committed capital.
• Joint-Stock Company (A.Ş.): This is suitable for large-scale e-commerce projects or ventures aiming to attract investors. Its formation and management are more complex, but it has the strongest corporate image.

Key Considerations When Forming an E-commerce Company

• Business Activity: Ensure your company’s articles of association clearly define your e-commerce activities. Phrases like “online sales,” “e-commerce,” and “digital marketing” should be included.
• Legal Obligations: Your e-commerce site must include all necessary legal texts (distance selling agreement, privacy policy, KVKK clarification text, etc.).
• Payment Systems: To partner with banks or virtual POS providers, you’ll need your tax plate and other company documents.

It’s crucial to remember that properly managing legal processes in a dynamic field like e-commerce is vital for the sustainability of your business. Therefore, seeking support from a lawyer or a financial advisor from the very beginning is the most appropriate approach.

What is a Sole Proprietorship in Turkey?

A sole proprietorship is a type of commercial business established and managed by a single individual. This company type does not have a legal personality, and the owner is directly responsible for all rights and debts. This means the individual’s personal assets are also liable for the company’s debts. Sole proprietorships are seen as an ideal starting point for small-scale businesses, freelancers, or individual ventures like e-commerce.

How to Form a Sole Proprietorship in Turkey

Forming a sole proprietorship is a much faster and easier process compared to other company types. After preparing the necessary documents, you can open your company by applying through a financial advisor or directly to the tax office yourself.

Steps for Sole Proprietorship Formation:

• Determine a Business Address: First, you must decide on an address for your business activities. This address can be your home or a rented office.
• Appoint a Financial Advisor: It is mandatory to work with a financial advisor who will handle your formation procedures and keep your legal books. Your financial advisor will guide you from the start and ensure all legal processes are managed correctly.
• Prepare Necessary Documents: Prepare the documents listed below and provide them to your financial advisor.
• Apply to the Tax Office: Your financial advisor will submit the prepared documents to the tax office. A tax officer will then conduct a site visit to check your company address.
• Obtain the Tax Plate and Documents: Following the visit, your tax plate will be issued, and your company will be officially ready to operate.

Why You Should Choose Istanbullawoffice for Company Formation

Company formation is a critical process that requires legal knowledge and experience. One wrong step can lead to serious legal and financial problems in the future. This is where Istanbullawoffice comes in. We take the complexity out of the company formation process for you, ensuring it is managed correctly and reliably.

Here are the main reasons to choose Istanbullawoffice:

• Expertise and Experience: With years of experience in the legal field and in-depth knowledge of company law, we offer you a customized and flawless formation process. We don’t just prepare the basic documents; we also develop legal strategies that will secure the future of your business.
• End-to-End Service: We meticulously handle all processes on your behalf, from determining your company type to drafting your articles of association, making MERSIS applications, and completing Trade Registry procedures. This allows you to focus on other important aspects of your business, confident that all legal processes are being handled professionally.
• Fast and Effective Solutions: We minimize the time loss caused by bureaucratic processes. With correct document management and quick applications, we ensure your company gains legal status as soon as possible. We proactively identify potential setbacks in the legal process and provide custom solutions for you.
• Confidentiality and Trust: All your data and business secrets during the company formation process are protected at the highest level, in line with legal ethics and confidentiality principles. You can be certain that all information about your business is in safe hands.

To get a solid start in your business life, protect yourself from potential legal risks, and manage the entire process with professional support, we are here for you at Istanbullawoffice.