Company Formation in Turkey: 2025 Updated Guide for Foreign Investors
I. Introduction
Turkey remains an appealing destination for international investors aiming to establish a business presence. Positioned at the crossroads of Europe and Asia, it offers significant market opportunities. In 2024, several regulatory updates have been introduced, particularly regarding minimum capital requirements, making it essential for foreign entrepreneurs looking into the procedures of company formation in Turkey to stay informed.
Investors planning to form a Joint Stock Company (A.Ş.) or a Limited Liability Company (LTD) must navigate these revised procedures carefully. Understanding the new incorporation rules and financial thresholds is crucial for a seamless company setup in Turkey.
II. Types of Business Entities in Turkey
Foreign investors looking to set up operations in Turkey typically opt for one of two corporate structures: Joint Stock Companies (A.Ş.) and Limited Liability Companies (LTD). Both structures permit 100% foreign ownership but differ in terms of management flexibility, capital investment, and operational requirements.
a. Joint Stock Company (A.Ş.): 2025 Requirements
As of 2025, the minimum capital requirement for a Joint Stock Company (A.Ş.) is TRY 250,000, with at least 25% required to be deposited into a company account before incorporation. The remaining balance can be contributed within 24 months. A.Ş. companies are particularly attractive to larger businesses due to their flexible share transfer rules. In most cases, share transfers do not require notarization or official registration, unless specified otherwise in the company’s Articles of Association (AoA). Governance is handled by a Board of Directors (BoD), which may consist of a single member, either an individual or a legal entity.
b. Limited Liability Company (LTD): 2025 Requirements
Limited Liability Companies (LTD) remain a popular choice among small and mid-sized enterprises. The minimum capital requirement for an LTD is TRY 50,000, payable over a 24-month period without any initial deposit obligation. Unlike A.Ş. companies, share transfers in an LTD require majority shareholder approval and must be notarized and registered. Additionally, LTD companies are managed by a Board of Managers (BoM), where at least one manager must be a shareholder, ensuring tighter control over decision-making.
c. A.Ş. vs. LTD: Choosing the Right Structure
Selecting between an A.Ş. and an LTD depends on various factors, including investment scale, ownership preferences, and corporate governance flexibility. Foreign investors should assess their business needs to determine the most suitable corporate structure.
III. Key Steps for Incorporation
The incorporation process in Turkey has been simplified in recent years, but investors must still adhere to specific legal and procedural requirements.
a. Required Documentation
The first step involves preparing the necessary legal documents. Individual foreign investors must provide notarized copies of their passports, while foreign corporate shareholders must submit an official investment decision from the parent company, authenticated by an apostille certificate. These documents must be translated into Turkish and notarized to comply with local legal requirements.
b. Drafting the Articles of Association (AoA)
Once documentation is ready, the company’s Articles of Association (AoA) must be drafted. This document defines the company’s business scope, governance structure, and operational framework. Foreign investors should ensure the AoA aligns with their commercial objectives while adhering to Turkish corporate laws. The final version is then submitted via Turkey’s online trade registry system to initiate the incorporation process.
c. Registering with the Chamber of Commerce
Once the AoA is approved, the company must be registered with the Chamber of Commerce, which officially recognizes the business as a legal entity. The registration process varies depending on the company type, with LTD registrations generally being more streamlined compared to A.Ş. setups.
d. Final Steps: Company Books and Tax Registration
Following incorporation, companies must notarize their legal and accounting books and complete tax registration. A final on-site inspection by tax authorities is typically required before operations can commence.
IV. Corporate Governance and Management
A well-defined management structure is essential for operational efficiency. Investors must understand the distinct governance frameworks for A.Ş. and LTD companies.
a. Management Structure in A.Ş. and LTD Companies
- A.Ş. Companies are governed by a Board of Directors (BoD), which can consist of one or more members, including individuals or legal entities. The BoD has broad decision-making authority and can appoint non-shareholder directors.
- LTD Companies are managed by a Board of Managers (BoM), where at least one manager must be a shareholder. This structure offers more direct control but may also impose work permit obligations for foreign investors involved in active management.
b. Delegation of Authority
Both corporate structures allow for the delegation of signature rights to directors or managers, facilitating day-to-day business operations. This is particularly useful for foreign investors who wish to delegate operational authority while retaining strategic control.
V. Practical Considerations for Foreign Investors
While Turkey offers a business-friendly environment, foreign investors should be aware of several practical challenges during company formation.
a. Navigating Bureaucracy
Despite ongoing improvements, bureaucratic procedures remain a key consideration. Investors must complete notarized translations, chamber registrations, and bank account formalities, which can be time-consuming. Engaging a local law firm can significantly streamline the process.
b. Language Barriers
Although English is commonly used in international business, Turkish remains the official language for legal and corporate documentation. Working with bilingual professionals can help avoid misinterpretations and ensure compliance with regulatory requirements.
c. Banking and KYC Compliance
For A.Ş. companies, an initial capital deposit is required before incorporation. Turkish banks enforce strict Know Your Client (KYC) procedures, often requiring in-person verification for foreign investors. Proper planning can help avoid delays in opening corporate bank accounts.
VI. Conclusion
Turkey continues to be an attractive market for foreign investors, offering significant opportunities across various sectors. With recent regulatory changes, including revised minimum capital requirements, setting up a company in Turkey has become more structured but requires careful financial planning.
By choosing the right company type (A.Ş. or LTD), ensuring compliance with legal and tax regulations, and addressing practical challenges such as bureaucracy and banking procedures, foreign investors can establish a successful business in Turkey. With proper strategic planning, companies can maximize their investment potential while ensuring long-term sustainability in the Turkish market.
