COMPANY FORMATION TURKEY
- written by Dayslegal
- May 24, 2016
- 3 min read
Updated: May 30, 2019
Turkey’s Foreign Direct Invesment Law is based on the principle of equal treatment, allowing international investors to have the same rights and liabilities as local investors.
The company incorporation process in Turkey is straightforward and one of the shortest in Europe. A company could be established in a day provided that all the required documents are ready to be submitted to the Trade Registry. Registration process usually takes 2 days. After Trade Registry, tax office will check the headquarter and activates the tax number. That also takes at least couple of days. The investor can begin running the new business in 5-6 days, when all the necessary documents are ready.
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Turkey has a very attractive business climate. There are 21 free trade zones throughout Turkey which offer through tax exemptions to various business sectors and to companies trading in a wide array of goods.
Turkey has a dynamic economy that attracts numerous foreign investors. It also has a promising economic growth and the country is expected to have one of the fastest growing economies among the OECD members. Moreover, Turkey encourages foreign direct investments and has a dynamic private sector.
The types of companies that can be incorporated in Turkey are:
- The Joint-Stock Company,
- The Limited Liability Company,
- The Commandite Company,
- The Collective Company,
- The Cooperative Company.
Mostly used types are the Joint-Stock Company and the Limited Liability Company.
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Advantages of Registering a Limited Liability Company (“LLC”)
The limited liability company is the most popular form of business. At least one shareholder is required to form this type of company. The liability of the shareholders is limited to the amount of share capital invested in the company. A minimum share capital of 10,000 TRY also had to be deposited during the initial phase of the incorporation process
A Turkish Limited Liability Company is a limited company broadly equivalent to the German GmbH of the French Sàrl. 100% foreign ownership of a Turkish LLC is permitted. The Turkish Commercial Code allows limited companies to consist of just one shareholder and there are no restrictions on residency or nationality.
A LLC gives a greater degree of business credibility. Operating your business as a limited company is more credible and prestigious than operating as a sole trader.
Furthermore, the company's name is protected and incorporation protects the name from use by another limited company. A LLC limits the risk to which all stakeholders are exposed. Trading as a limited company limits the risk to which all stakeholders are exposed.
A LLC is a legal form of a business organisation, which is classed as an entity that is separate and distinct from the individuals who run it; for sole traders and for people in partnerships, the individuals’ personal assets are at risk if there is a claim against the organisation but shareholders in a limited liability company are only liable to lose the value of the share capital to which they subscribe.
A LLC has a less brittle management structure. The company can continue to trade despite the death, resignation or bankruptcy of members. The appointment, retirement or removal of a director is straightforward.
Advantages of Registering a Joint Stock Company (“JSC”)
The joint stock company has a larger minimum share capital than the limited liability one - 50,000 TRY. The existence of one founder is adequate for the establishment of the joint-stock company. But, in the establishment of joint-stock company with one founder/shareholder (a one-man company), the shareholder's name, place of residence and citizenship must be registered in conjunction with the company.
General Assembly, Board of Directors and Supervisory Board are company organs. Annual meetings must be held within 3 months of the end of the financial year and the Board of Directors calls the meeting.
The liability of the members is limited to the amount of invested capital and the capital is divided into stocks which can be made public when the company is listed on the Stock Market.
Cash, receivables, negotiable instruments, shares of other companies, intellectual property rights, all types of movable and immovable properties, domain names, license of mines and everything that its transferable and has a cash value can be contributed to the JSC as capital.
The joint stock company can be established for any economic purpose that is not prohibited by law. As a general rule, the establishment of joint stock companies and changes to their articles of association do not require the permit of any authority. This type of company is more suitable for large businesses.
Other business options for investors include branches or subsidiaries in Turkey. Our team can give you detailed information about each type of company.
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