NEWS & PUBLICATIONS

Presidency of the Republic of Turkey issued a new Presidential Decree, Amending Decree No. 32 on the Protection of the Value of Turkish Currency.
Decree was published in the Official Gazette dated 13 September 2018 and has entered into force and introduced new regulations regarding the transactions over foreign currency between Turkish residents.
Pursuant to the Amendment, Turkish residents acting as party to below contracts with other Turkish residents are prohibited to use foreign currency:
All types of movable and real property lease agreements, including vehicle lease and financial lease, and leasing agreements,
employment and service agreements and contracts of work and,
all other payment obligations arising from above agreements.
The parties who have entered into an agreement falling into the scope of above prohibitions before the effective date of the Decree, are obliged to convert the foreign currency amounts into Turkish currency in 30 days starting from 13 September 2018.
At this stage, it is expected that there will be a clearer picture in terms of the implementation of the Decree with the new regulations and clarifications in the coming days.
Please bear in mind that fines stipulated in the Law on Protection of the Value Turkish Currency numbered 1567, may have implied to the one who fails to comply with the decree.

Branch Office;
• is closely associated with the principal company,
• may pursue commercial activities and carry out the business of the principal company,
• has autonomous capital and accounting, but the principal is liable for all debts of the branch office,
• must be registered with the trade registry,
 is regarded as non-resident entity and deemed a limited taxpayer. 
Liaison Office;
 is closely associated with the principal company,
• cannot pursue commercial activities,
• can provide “representation” and “relationship management” for the principal’s Turkish customers and suppliers,
• can be established with a permission from the Ministry of Economy,
• must be registered with a tax office, although it has no commercial activity.

The most preferred corporate entity types, especially by the foreign investors, are joint stock corporations (“JSC”) and limited liability partnerships (“LLP”). 

 

Key features

JSCs

LLPs

 

Application and Registration

Competent       Trade    Registry

Offices

Competent       Trade      Registry

Offices

 

Term

Definite or Indefinite term

Definite or Indefinite term

 

Minimum Capital Requirement

Minimum TRY 50,000

Minimum TRY 10,000

 

Minimum/Maximum Number of Partners/Shareholders

 

Minimum one shareholder No limit for maximum number of shareholders[2]

Minimum one shareholder

Maximum 50 shareholders

 

Nationality of the Partners/Shareholders

No restriction on nationality

 

No restriction on nationality

 

 

Corporate Bodies

General assembly of shareholders and board of

directors

General           assembly          of

shareholders and managers

 

  

Managed by board of directors

Managed by managers

 

  

Represented by joint signatures of any two board members, unless otherwise is determined

Represented by joint signatures of any two managers, unless otherwise is determined

 

  

Delegation of representation authorities by board members is possible

Delegation of representation authorities by managers is possible

 

 

At least one board member must be authorized to represent and bind the company

At least one shareholder must be appointed as a manager and must be authorized to represent

and bind the company

 

  

No requirement to have a

Turkish citizen board member

No requirement to have a

Turkish citizen manager

 

 

Liability of Board of Directors/Managers

Liability regarding representation and management of the company

Joint and several liability for public receivables

Liability regarding representation and management of the company

Joint and several liability for public receivables

 

 

Liability of Shareholders/Partners

  

Limited to capital undertaking

Limited to capital undertaking, except for public debts (i.e. taxes, social security, etc.) for which the shareholders are liable pro rata to their shareholding percentages

 

 

Classes of Shares

Preferred share is allowed

Preferred share is allowed

 

 

Types of Shares

Registered shares and bearer shares

Only registered shares

 

 

Transferability of Shares

Unrestricted, unless otherwise determined under the articles of association

Unrestricted, unless otherwise determined under the articles of association

 

 

  

Share transfer process is simpler in JSCs compared to LLPs.

For registered shares, endorsement of share certificates and registration with the share ledger is required.

For bearer shares, delivery of the relevant share certificate suffices. However, the share transfer must be recorded in the company’s share ledger in order for it to be valid before the company.

A share transfer agreement must be signed before a Turkish Notary Public and a general assembly of shareholders resolution for the approval of the share transfer must be adopted.

The share transfer must be recorded in the company’s share ledger.

 

  

No need for registration with the trade registry

Must be registered with the

trade registry  

 

Profit Transfer and Taxation

Profits can be transferred abroad subject to certain tax implications

Profits can be transferred abroad subject to certain tax implications

 

Public Offering

Possible

Not Possible

 

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