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Establishing A New Company

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The pre establishment permits to be taken from the Undersecretariat of Treasury and Ministry of Industry and Trade has been abolished. It is now possible to establish a company just in 1 day when applied to the related Trade Registry Office with the required documents. The company gets its “legal entity” upon establishment.

COMPANIES WHICH CAN BE ESTABLISHED

Incorporated companies such as;
- Commandite Companies
- Collective Companies
- Joint Stock Companies
- Limited Companies

Unincorporated companies such as;
- Joint-venture
- Business Association
- Consortium

I) COMMANDITE COMPANIES:  
It is the company established to operate a commercial enterprise under a trade name and, the liability of some shareholders is restricted only to the capital subscribed and paid by the shareholder (commanditer), and some shareholders is not restricted to the capital subscribed and paid by the shareholder. Legal entities can only be commanditer. No minimum capital is required. The relationship between the shareholders is designated in the articles of association freely.

2) COLLECTIVE COMPANY:   
It is the company established to operate a commercial enterprise under a trade name and, the liability of none of shareholders is restricted only to the capital subscribed and paid by the shareholder. No minimum capital is required. It is mandatory that all the shareholders be real person. The relationship between the shareholders is designated in the articled of association freely.

3) JOINT STOCK COMPANIES; 
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.

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.  

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.

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. 

4) LIMITED LIABILITY COMPANIES; 

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.

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.   
 
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.

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 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

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

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.

DOCUMENTS REQUIRED FOR THE ESTABLISHMENT PROCEDURES OF JOINT STOCK AND LIMITED LIABILITY COMPANIES

A- Petition and form for company establishment notification, the examplar of which is given in Annex 4 of this Communique, duly filled in and signed by persons authorized to represent the company,

B- Notarized articles of association; one original and 2 copies,

C- Notarized signatures of persons authorized to represent the company together with the company trade name,

D- Letter of Commitment in accordance with Article 29 of the Trade Registry
 Regulation,

E- Bank receipt of the deposit paid to the Consumers’ Fund account, amounting to one thousandth of the company capital,

F- For joint stock companies specified in Article 5 of this Communique, the original letter of permit of the Ministry,

G- Certified copies of the ID certificates of the real person founders, and their residence certificates.


DOCUMENTS REQUIRED FOR AMENDMENTS IN ARTICLES OF ASSOCIATION OF JOINT STOCK AND LIMITED LIABILITY COMPANIES

A- Petition for registration bearing the company’s trade name, signed by company officials,

B- Amendment text which has been approved by the shareholders’ meeting in joint stock companies and by board of shareholders in limited liability companies, in 3 copies,

C- Minutes of the shareholders’ meeting for joint stock companies and for limited liability companies having more than 20 shareholders; resolution of board of shareholders for limited liability companies having 20 or fewer shareholders,

D- For joint stock companies, list of participating shareholders at the shareholders’ meeting,

E- Letter of the Ministry of Industry and Trade assigning commissioner for the shareholders’ meeting for joint stock companies and limited liability companies having more than 20 shareholders,

F- For joint stock companies specified in Article 5 of this Communique, the original letter of permit from the Ministry.