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Citizenship Law
Residence permit: Foreigners who will stay in Turkey for more than one month must get a residency permit before this time ends. Foreigners who have come to Turkey in order to find work must get a residency permit in one month after they have arrived and before they begin to work. Foreigners who have entered the country with a “Tourist” stamped visa and with their joint passports who have come with the purposes such as; travel, national or international history, culture and fine arts festivals, sport events, convention and conferences, exhibitions and fairs or in places which the council of ministers have appointed with the purposes of visitation, treatment and change of air, are exempted from getting a residency permit for two months. If necessary this period may be extended for another two months. When the conditions shown in the Law about Foreigners Residency and Travel are present the applications for residency permits may be rejected.
Work Permit: Foreigners must get a work permit before they begin to work dependently or independently. In order to get a work permit an application must be made to the Work and Social Security Ministry.
The Law about Foreigners Residency and Travel recognizes four types of work permits which are limited, unlimited, independent and exceptional.
Limited Work Permit: By taking into consideration the situation in the business market and the changes in the sector and economical conjuncture relating employment it is given for one year for working at a certain workplace or occupation. At the end of one year it may be extended for another three years. At the end of the three year working period with the intention of working in the same occupation and under an employer in which the person may choose, the period may be extended for another six years. Spouses and children with the condition that they have resided with the foreigner for at least five years legally and continuously may be given a work permit as well.
Unlimited Work Permit: Foreigners who have been residing in Turkey for at least eight years or foreigners who have at least six years employment may be given an unlimited work permit. In addition the situation of the work market and the developments in work life are not taken into consideration and it may not be limited to a certain business, occupation, geographic or territorial area.
Independent Work Permit: For foreigner who will work independently with the condition that they have been residing in Turkey for at least five years may be given an independent work permit by the Ministry.
Exceptional cases: The law allows work permits to be given to people with certain aspects without requiring the passage of the periods shown in the regulations.
For example, foreigners who are married with a Turkish citizen and live with their spouse in Turkey as a married couple or when after three years of marriage it has ended yet the foreigner still resides in Turkey, as well as for the children from the spouse which is a Turkish citizen. Also the citizens of countries which are in the European Union and their spouses and children which are not citizens of a country in the European Union may be given a work permit without observing the periods shown in the law.
A work permit, aside from when the period of validity has come to an end or loses its validity when the residency permit has become invalid from any reason or the validity period is not extended or when the validity period of a passport or the validity period of a document used in the place of a passport is not extended or apart from a force major situation if the person has stayed continuously in another country for more than 6 months loses its validity.
Property purchase by foreigners: Foreign real persons, commercial companies, companies established in Turkey by foreigners may acquire properties in Turkey. Foreign legal entities which are not commercial companies (donation foundations, associations, political parties, syndicates) may not acquire properties in Turkey.
Foreign real people with the condition the reciprocity and the limitation of the law are followed may acquire a property in Turkey in order to use them as a business place or as home or may acquire registered lands which have been separated to fulfil to goals shown in the implemented development plans and local development plans. The total properties as well as the independent and continuous limited real rights of a foreign real person may not pass a square measure of two and a half hectares which is 25,000 m2.
Foreign real persons and foreign commercial companies which have a legal entity according to their countries laws are prohibited to acquire the property which are defined by the Council of Ministers these are; areas which need to be protected such as watering, energy, agriculture, mines, religious and places of culture, special protection areas as well as sensitive places which have flora and fauna which need to be protected and strategic places which are prohibited for the public safety and the country’s safety. Foreign real people in the central district and districts may acquire immovables as well as independent and continuous natured limited real rights inside the limits of the implemented development plans and local development plans for up to ten percent of the total areas square measure.
Foreign commercial companies may only acquire a property and limited real rights on properties in the frame of the 2634 numbered Encouragement of Tourism Act, the 6326 numbered Petrol Act and the 4737 numbered Industry Areas Act.
The foreign companies which have been established or have been joined by foreign investors in order to exact the activities shown in their main contract may acquire a property or limited real rights and may use them. In the transfer of the property acquired this way to a other foreign capital company established in Turkey and when a local capital company becomes a foreign capital company after its shares were transferred the same principle is followed.
Establishment of a company by foreigners in Turkey
1. According to the Direct Foreign Investments law foreign investors are;
- Foreign country citizens
- Turkish citizens residing outside of Turkey
- Legal entities established according to a foreign country’s laws and international laws
who directly make foreign investments in Turkey.
In order to exact the registry obligations defined in the law, the foreign investor may establish a company, open a branch or be a partner to a company in Turkey. Foreign investors may establish every type of company which has been regulated in the Turkish Commercial Code and the Obligations Code. However the types of companies most preferred are the limited companies and the joint stock companies.
Direct foreign investment is;
- Cash capital as convertible cash which are subjected to buying- selling transactions by the Turkish Republic Central Bank,
- Company securities ( except state bonds),
- Machines and equipment,
- Intellectual property rights
Brought by a foreign investor from outside the country or
Acquired in the country;
- The profit, proceeds, money claims or other rights relating investment which have financial value used in reinvestment,
- Rights relating the search and extracting of natural resources.
2. In Turkey the type of companies which may be established according to the Turkish company law are these:
- Unlimited Liability Company
- Commandite Company
- Limited Company
- Joint Stock Company
- Cooperation
- Ordinary company which does not have a legal entity (Regulated in the Code of Obligations)
Unlimited Liability Company: For an unlimited liability company no minimum amount of capital is requested. The company’s partners are jointly and unlimitedly responsible of the company’s debts. For the establishment of a company it is mandatory that there are at least two partners.
Commandite Company: In commandite companies as in German law the dormant partners’ responsibility is limited to a certain amount of capital whereas the active partners’ responsibility is unlimited. For the establishment of the company a minimum amount of capital is not foreseen.
Limited Company: A limited company is established by at least two real persons or legal entities. The minimum amount of capital for establishment is 5.000 TL (approx 2500 Euro). The shareholders of the limited company are responsible for the amount of capital of which they have promised. These companies may not be opened to the public and their shares do not get processed in the stock market.
Joint Stock Company: It is established by at least five real persons or legal entities. The minimum capital amount for establishment is 50.000 TL (approx. 25.000 Euro). The responsibility is limited to the amount of capital which was promised. Joint stock companies just like in German law are in two types which are the joint stock company open to the public and a joint stock company which is not open to the public. The mandatory institutions just like in German law are;
- Board of directors consisting of at least three shareholders (if wanted a manager may be appointed as well)
- Board of Inspection (Control) consisting of a maximum of five people (If there is only one inspector then they must be a Turkish citizen if there is more than one inspector then half plus one of them must be a Turkish citizen)
-The General Assembly is the one which makes the decisions relating the companies politics and is the one with a high authority. Joint stock companies have been regulated in both the Turkish Commercial Code and the Capital Market Code as well. In joint stock companies for some activity areas (Banking, Insurance, factoring) before establishment a permission must be given by the Industry and Commercial Ministry.
3. The establishment process shows differences when establishing a company and when establishing a branch. Foreign investors may also establish a liaison office in order to examine the market, client profiles and competition of the area in which they seek to function in. For this reason all three of the; company establishment, branch establishment and liaison office establishment procedures has been examined:
3.1. The process of establishing a company in Turkey has been simplified greatly. Such that; establishing a company in only a few days are possible. Establishing a company consists of these stages:
- The company’s articles of association must be signed by the company’s partners.
- The signatures’ must be approved by the notary.
- An application and form which states the declaration of the establishment of the company.
- Amongst the founders if there is a foreign real person then the original of their passport and in the case of submission its photocopy or notary approved copy of it, for legal entities from the related Turkish Consulate or according to the regulations of the Contract of Removing the Obligation of Having Foreign Official Documents Approved (containing an apostle endorsement) made inside the frame of the Lahey States Special Law Conference and the original or notary approved translation of the activity document given by the Industry or/and Commercial Chamber in which the company is registered in or given by a court which has authority.
- Along with these documents a receipt that shows that the minimum amount of capital has been paid and an authorized signatures list an application is made to the Commercial Trade Management for registry. After registration the Tax office must be applied to as well.
- Registration is announced in the Commercial Register Gazette. After registration the company may become active. However an important point needed to be considered is the fact that the tax office should be applied to on the same day the registry is made. Otherwise a punishment fee is given because of irregularity.
3.2. Branch Establishment: Foreign investors may establish a branch in Turkey with a small cost. In order to establish a branch, a branch representative residing in Turkey must be appointed and permission must be given by the Industry and Commercial Ministry. Branches do not have a separate legal entity and do not get registered in the Trade Registry.
The necessary documents needed for establishing a branch are these:
- A translated and apostilled main contract of the company.
- Permission by the Ministry
- An empowerment document in the name of the branch representative
- Authorized signatures list of the Branch representative
- If the branch representative is a Turkish citizen, then a notary approved ID card, if the company representative is a foreign national the authoritative foreign representative’s notary approved copy of their passport, work permit and residency permit.
A branch establishment is usually seen as the first step of establishing a company. Because establishing a branch creates an advantage in respect to tax, business law and work permits. The branch representative may sign contracts which concerns the main company found abroad or may establish commercial relations.
3.3. Liaison Office: Foreign investors with the intention of examining a market and establish relations may open liaison offices. It is forbidden for liaison offices to show activity with a commercial motive. Establishment of a liaison office; has an effect after the works of the office leads to the establishment of a company or after doing important works such as inspecting the quality of the Turkish producer. Along with the application procedures after the necessary documents and forms which need to be filled are completed, the permission for opening a liaison office is given in 5 days.
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