NEW DEVELOPMENTS ABOUT FOREIGN DIRECT INVESTMENT LEGISLATION

The new Foreign Direct Investment Legislation was issued on the day of 5.6.2003 to reduce the problems that foreign investors facing with in Turkey and making it easier for them to invest. The new Direct Foreign Investment Legislation tolerated the bureaucracy on the level of 70 % and abolished to get pre-authorization to establish a company and its offices just like the other countries which have similar procedures. This legislation abolished the differences between establishing a company by a Turkish investor and a foreign investor in Turkey.

That companies which have foreign capital in Turkey are accepted as Turkish companies, no additional privileges, different obligations or stimulations will be the subject matter. The subjects about foreign investors are approved in the Constitution and related legislation and new Direct Investment Legislation.

With the new developments in this Legislation to establish a company with foreign capital need not ask authority from the General Department of Foreign Capital. >From now on, foreign companies and Turkish companies shall be subject to the same Legislation.
In this case, because of having the same procedure for either Turkish or foreign companies, the rights and obligations are going to be related to Turkish Commercial Code and related legislation.

In the enlightenment of the new Legislation, it is mentioned that as the actions and operations of the investors in Turkey, the net profit, dividend, liquidation, disposal, compensation value, license, the fee of management and related agreements and the payment of the capital of foreign credit and interest can be transferred through the banks and private financial institutes outside of the country. Besides, in the Turkish Commercial Code, Art 137, it is mentioned that to have the rights and obligations for commercial companies, the activities have to be written in the article of association.

If the companies that are established by foreign investors or having a foreigner shareholders are established based on Turkish Legislation and have a head office in Turkey are considered as Turkish Companies. Thus, the companies which have Turkish legal personality will be able to possess real estates freely. Foreign natural persons will have to continue to be subject to the reciprocity principals.

The principles of Constitutional and Expropriation Law shall be arranged correspondingly, the framework of mutual agreements and the other international agreements. The expropriation can not be applied unless it suits to the principles which are mentioned above.

National or international arbitration or the other resolutions –like mediation, negotiation- can be applied to the resolution of dispute of investment agreements which are subject to Private Law and to the resolution of the dispute of the privilege agreements of public services that foreign investors sign with the Administration, if the parties agree and the conditions with related legislation become real alongside with the charged and qualified courts.

Depending on the Code 6624 and related legislation, every shareholder had to bring at least 50.000 US Dollars to establish a company with foreign capital and also the company had to be either limited liability or joint stock. These obligations are abolished with the new Direct Foreign Investment Legislation.

As we mentioned above, the differences on establishing and operating the company between foreigners and Turkish investors are abolished with the new Direct Foreign Investment Legislation. Additionally, the privileges like disposal value and profit transfer to direct foreign investors to Turkey has been proceeding for nearly 1,5 years in Turkey. In the near future, it is expected that foreign investments in our country will increase because of the new developments in this Legislation.