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The first step required in setting up a company is the preparation of the Articles of Associatior. These Articles of Association should contain, in written form, the items required by Article 279 of the Turkish Commercial Code. They must also have the necessary authentication by the Notary Public after signature by the shareholders.

To constitute a company, first of all a written contract has to be prepared for signature by every founder. This agreement must contain certain obligatory clauses as the the trade name and centre of the company, each founder’s full name and address, the nationality and details of foreign partners, the scope and the range of activity of the company, the capital of the company, the amount of reserved funds, and aspects regarding to the profit and loss, appointment of the directors and the board of directors among other areas.

Relevant legislation

In Turkey today, legislation relevant to foreign investments is contained in:

• The Foreign Direct Investment (FDI) Act
• The Foreigners’ Work Permit (FWP) Act

The biggest difference brought about by this Act has been in the replacement of an earlier ‘permission & approval’ system by an information system, making investment simpler for foreigners in Turkey.

Foreign Investors

• Foreign nationals or Turkish citizens residing outside the country, and
• Legal entities or international institutions which are founded in accordance with regulations of a foreign country and

The basis of the FDI Act, largely, is parity between domestic investors and foreign ones, except where international contracts or special provisions may require.

Foreign and domestic investors are required to follow largely the same processes, especially in establishing companies, and possess similar rights and obligations.

The General Directorate, specifically, has to be apprised of three particular aspects of the firm or its branch:

• Capital and Annual Activities, a Form on Foreign Direct Investment, which is to be submitted by the end of May;
• Payments to Capital Account, within one month of the same being made, a Form on Capital Information for Foreign Direct Investment; and
• Any share transfers between the firm’s domestic or foreign partners, or any external investor, within one month of the transfer itself, the Form for Information on Share Transfer for Foreign Investors.