Establishing a Joint Stock Company in Türkiye: Strategic Legal Framework for Foreign Investors

Legal Classification and Corporate Form (TCC Article 329)

A joint stock company (Anonim Şirket) under Article 329 of the Turkish Commercial Code No. 6102 ("TCC") is a capital company divided into shares, with shareholders liable only up to the capital they subscribed. This ensures no personal liability beyond contributions.

The joint stock company is similar to a corporation in the U.S. or a PLC in the U.K. and can be closely held or publicly listed. Article 42 TCC mandates inclusion of “Anonim Şirket” in the trade name and that it reflects the business defined in the articles.

Classified as legal persons with full legal capacity (TCC Art. 48, Civil Code Art. 47), joint stock companies may acquire rights, assume obligations, and engage in legal proceedings.

Capitalization and Shareholder Structure (TCC Articles 332, 338)

Per Article 332(1) TCC, the minimum capital for incorporation is TRY 250,000 (2025).[1] For companies under the registered capital system—common for public offerings—the minimum is TRY 500,000 (Art. 332(2) TCC; CMB Communiqué II-18.1).

This system allows the board to increase capital within a limit approved by the general assembly. Article 338(1) TCC permits single-shareholder companies, with no restriction on foreign ownership, enabling 100% foreign-owned subsidiaries or SPVs .[2]

This framework supports both greenfield investments and cross-border operations.

Articles of Association and Formation Procedure (TCC Articles 335–355)

The Articles of Association (ana sözleşme) must be in Turkish and notarized. Per Articles 339–341 TCC, they must include:

• Company name and Office;[3]
• Business purpose (NACE codes);
• Share capital and classifications;
• Governance and representation;
• Company duration and meeting rules.

Legal personality arises upon Trade Registry registration (Art. 335 TCC), but founders’ liability begins upon notarization. Articles should align with global compliance and group governance structures.[4]

Capital Contributions and Structure (TCC Articles 342–344)

A. Cash Contributions

At least 25% of subscribed cash capital must be deposited before registration (Art. 344(1) TCC); the rest within 24 months.[5] Funds remain in a blocked account until registration.[6]

B. In-Kind Contributions

Allowed under Article 342(1) TCC if assets are transferable, unencumbered, economically valuable, and balance-sheet eligible.[7] They must be appraised by court-appointed experts (Art. 343(1) TCC).

This system ensures financial integrity and aligns with international disclosure standards.

Incorporation and Legal Personality (TCC Articles 354–355)

Legal personality is acquired upon Trade Registry registration (Art. 355 TCC).[8] Before this, the entity is in a pre-incorporation phase (Art. 335/2 TCC), with limited activities.[9]

Registration must occur within 30 days of Articles notarization (Art. 354 TCC), with submission of eposit proof, valuation reports, and board declarations.[10]

After registration, the company may:

• Own assets,
• Contract,
• Litigate,
• Assume obligations.

Failure to register invalidates the process, with founders liable for interim actions.[11]

Corporate Governance Framework (TCC Articles 359–451)

A. General Assembly

The general assembly (Arts. 408–409 TCC) is the supreme body, deciding on financials, dividends, board appointments, amendments, capital changes, and more.[12] Meetings follow statutory rules (Arts. 410–418 TCC).[13]

B. Board of Directors

Under Article 359(1) TCC, the company must have a board of directors consisting of at least one member, who may be either a natural or legal person. The board manages the company and ensures compliance.

Members must provide signed declarations and notarized/apostilled documents if foreign. Board members must sign a declaration of acceptance and provide specimen signatures for registration. Foreign individuals serving as directors must have their documents notarized and apostilled in accordance with The Hague Apostille Convention, if originating outside Türkiye.[14]

C. Statutory Auditor

According to Article 397 TCC, joint stock companies that exceed statutory thresholds based on total assets, turnover, and number of employees must appoint an independent auditor. The appointment must be made by the general assembly and registered with the Trade Registry.[15]

Auditors must be independent and qualified under the regulations of the Public Oversight Accounting and Auditing Standards Authority (KGK). The auditor’s role includes the examination of the company’s financial reports, ensuring compliance with Turkish Financial Reporting Standards (TFRS), and submitting an annual audit report to the general assembly.[16]

This structure ensures transparency and accountability.

Shareholder Liability and Transfer of Shares (TCC Articles 329, 360)

A. Shareholder Liability

Liability is limited to unpaid share capital (Art. 329 TCC). No further obligations exist unless fraud or personal guarantees apply.

B. Share Transfer

Shares are freely transferable unless restricted in the Articles (Art. 329, 360 TCC). Transfer rules:

• Bearer shares: Transferred by delivery (Art. 489 TCC);
• Registered shares: Must be endorsed and entered in the share ledger (Arts. 490, 499 TCC).

Restrictions must serve legitimate purposes and cannot prohibit transfers. Unregistered transfers are unenforceable.

Pursuant to Article 360 TCC, the articles of association of a non-public joint stock company may include provisions restricting the transfer of registered shares, including a right of first refusal, consent requirements, or approval by the board of directors. However, such restrictions must not amount to a complete prohibition on transfer, and must serve a legitimate corporate purpose, such as maintaining control or preserving a closed ownership structure.[17]

Trade Registry notification is required only for specific regulatory disclosures.

Trade Name and Regulatory Compliance (TCC Articles 41–43)

Per Articles 41–43 TCC, the trade name must include “Anonim Şirket” and reflect the business scope. Trade names must be distinctive, non-deceptive, and not misleading regarding the company’s size, scope of activity or legal status.[18]

Foreign terms are allowed with Ministry of Trade approval. Geographical or official-sounding names may require special permission.

Names are reviewed and protected upon MERSIS registration.

While Turkish is the default language for corporate titles, foreign words, Latin letters, and internationally recognized terms may be used with prior approval from the Ministry of Trade, provided that such usage is not contrary to law, public policy or morality.

Pre-Incorporation Legal Capacity (TCC Article 335/2)

Before registration, the company can perform necessary pre-incorporation acts (e.g., opening a bank account). Founders are liable for actions unless later ratified.

Post-Incorporation Regulatory Obligations

After registration, the company must:

• Register with Tax Registration: The company must obtain a Tax Identification Number (TIN) from the local tax office and register for value-added tax (VAT) and corporate income tax purposes, in accordance with the Tax Procedure Law No. 213.[19]
• Social Security Registration: If the company employs personnel, it must register with the Social Security Institution (SGK) and fulfill employee notification, premium payment, and labor law obligations.[20]
• Bank Account and Compliance: A corporate bank account must be opened in the company’s name. The company must comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) obligations under Law No. 5549 on the Prevention of Laundering Proceeds of Crime and applicable Banking Regulation and Supervision Agency (BDDK) guidelines.[21]
• Electronic Integration: The company must enroll in the e-Invoice (e-Fatura) and e-Ledger (e-Defter) systems if it meets certain turnover or sectoral criteria, as prescribed by the Revenue Administration (GİB).[22]
• Competition Authority Fee: A one-time payment of 0.04% of the registered capital must be made to the Turkish Competition Authority, typically through the local Chamber of Commerce, as required under Law No. 4054 on the Protection of Competition.[23]
• Maintain Corporate Books: As per TCC Arts. 64–66 and tax laws.[24]
• Failure to comply may result in fines or restrictions.

Conclusion

Joint stock companies offer a flexible, compliant, and scalable structure for foreign investment in Türkiye. They support full foreign ownership, capital efficiency, and alignment with international norms. Legal counsel is essential for compliance and cross-border legal risk management.