Scope and Principles of Company Law in Turkey

What Are the Fundamental Principles of Company Law in Turkey?

The fundamental principles of company law in Turkey are legal personality and the separation of assets, limited liability, the protection of capital, the single-obligation principle, equal treatment, majority rule with the protection of minority shareholders, the system of mandatory provisions, and the management’s duties of loyalty, care and transparency. These principles shape the whole body of Turkish company legislation, above all the Turkish Commercial Code No. 6102. Taken together, they protect the trust of the shareholders who invest capital in the company and secure both the protection of shareholder rights and the accountability of board members and executives in Turkey.

1. Principle of Legal Personality and Separation of Assets in Turkey

Under Turkish law, commercial companies have legal personality; a joint-stock company and a limited liability company acquire a legal personality separate from and independent of their shareholders upon registration with the trade registry (TCC Arts. 125, 355, 588). The practical consequences of this principle in Turkey are as follows:

• Rights and Obligations in Its Own Name: Within the framework of Article 48 of the Turkish Civil Code, the company can acquire rights, incur obligations and be a party to lawsuits in its own name.
• Separation of Assets: The company’s assets are separate from the personal assets of its shareholders; a joint-stock company and a limited liability company are liable for their debts only with their own assets (TCC Arts. 329/1, 602).
• Position in Personal Companies: In a collective company, too, the company is primarily liable for its debts; however, if enforcement proceedings against the company prove fruitless or the company is dissolved, the partners with unlimited liability can be pursued (TCC Art. 237).
• Transactions Before Registration: Persons who act on behalf of the company before registration are personally and jointly liable for those transactions; only the company is liable if it was expressly stated that the transaction was made on behalf of the company to be formed and the company accepts it within three months after registration (TCC Arts. 355/2, 588/3-4).

2. Principle of Limited Liability in Turkey

The principle of limited liability means that, particularly in capital companies (joint-stock and limited liability companies), shareholders are not held liable for the company’s debts with their personal assets. As a rule, a shareholder’s risk under Turkish law is limited to the capital they have undertaken to contribute:

• In a Joint-Stock Company: Shareholders are liable only for the capital shares they have committed and only towards the company; they have no personal liability towards the company’s creditors (TCC Art. 329/2).
• In a Limited Liability Company: Shareholders are not liable for the company’s debts; they are only obliged to pay the capital shares they have committed and, if the company agreement so provides, to fulfil additional payment and ancillary performance obligations (TCC Arts. 573/2, 603).
• Exception for Public Receivables: Shareholders of a limited liability company are directly liable, in proportion to their capital shares, for public receivables that cannot be collected, in whole or in part, from the company (Law No. 6183, Art. 35).

The partners of a collective company and the general partners of a limited partnership, by contrast, have unlimited liability for the company’s debts. For this reason, when choosing a company type in Turkey, the liability regime should be treated as a decision that directly affects the shareholders’ personal assets.

3. Principle of Protection of Capital in Turkey

Since the main security for creditors of capital companies is the company’s assets and its registered share capital, Turkish law subjects any transfer of that capital back to the shareholders to strict rules. The main rules under this principle are as follows:

• No Return of Capital: Shareholders cannot reclaim what they contributed to the company as capital; their rights to a liquidation share are reserved (TCC Art. 480/3). No interest may be paid on capital either (TCC Art. 509/1).
• Distribution of Real Profits Only: Dividends may be distributed only from the net profit for the period and from free reserves; in a limited liability company, too, dividends may be distributed only from the net profit for the period and the reserves set aside for this purpose, after the statutory reserves have been allocated (TCC Arts. 509/2, 608/1). These rules prevent the distribution of unrealised (fictitious) profits.
• Return of Unlawfully Received Dividends: In a joint-stock company, shareholders who received dividends unlawfully and in bad faith are obliged to return them (TCC Art. 512). In a limited liability company, a shareholder or manager who unlawfully received profit is also obliged to return it; for those acting in good faith, the obligation cannot exceed the amount needed to pay the company’s creditors (TCC Art. 611).
• Acquisition of Own Shares: A joint-stock company may acquire its own shares only up to one tenth of its share capital, on the basis of an authorisation given by the general assembly to the board of directors for at most five years, and only for fully paid-up shares (TCC Art. 379). In a limited liability company the limit is, as a rule, ten percent, and twenty percent in the case of withdrawal or expulsion (TCC Art. 612).

General assembly resolutions that violate the provisions on the protection of capital are null and void (TCC Art. 447/1-c). Taking resolutions on capital and dividend distribution within the statutory limits therefore also prevents a separate liability risk for shareholders and executives in Turkey.

4. Single-Obligation Principle in Turkey

The single-obligation principle is one of the most distinctive principles of Turkish joint-stock company law, and it means that a shareholder’s basic obligation towards the company is only to pay the capital share they have committed (TCC Art. 480). The content of this principle is as follows:

• Subscription Obligation: Except for the exceptions provided by law, the articles of association cannot impose on a shareholder any obligation other than paying the share price or a premium exceeding the nominal value of the share (TCC Art. 480/1).
• No Additional Monetary Obligation: No additional payment obligation exceeding the capital debt can be imposed on a shareholder; an obligation that cannot be introduced by the articles of association cannot be introduced by a general assembly resolution either.
• Non-Monetary Ancillary Obligations: Where share transfers are subject to the company’s approval, the articles of association may impose on shareholders obligations to perform recurring non-monetary acts at certain times (TCC Art. 480/4).

The position is different in a limited liability company: the company agreement may provide for additional payment obligations not exceeding twice the nominal value of the capital share, as well as ancillary performance obligations (TCC Art. 603). Anyone planning to become a shareholder of a limited liability company in Turkey should therefore check in advance whether the company agreement contains such an obligation.

5. Principle of Equal Treatment in Turkey

The company’s management bodies and general assembly are obliged to treat shareholders in equal circumstances equally (TCC Art. 357). This obligation applies at every stage of the company’s internal relations in Turkey:

• Voting Rights and Dividends: No distinction may be made without just cause between shareholders in the same position when voting rights are exercised or dividends are distributed; each shareholder participates in the net profit resolved to be distributed in proportion to their shares (TCC Art. 507/1).
• Right to Information: If information has been given to one shareholder in that capacity outside the general assembly, the same information must be given in the same scope and detail to another shareholder upon request (TCC Art. 437/2).
• Privileges: Privileges granted to certain types of shares in the articles of association are reserved (TCC Art. 507/2); since privileged shares are not in equal circumstances, such a difference does not breach the principle of equal treatment.

6. Majority Rule and Protection of Minority Shareholders in Turkey

The majority principle governs internal decision-making in Turkish companies; unless the law or the articles of association require a stricter quorum, general assembly resolutions are adopted by a majority of the votes present at the meeting (TCC Art. 418/2). However, the will of the majority is not unlimited: it is restricted by the principle of good faith, the principle of equal treatment and mandatory provisions of law, and resolutions violating them can be challenged by an action for annulment filed within three months of the resolution date (TCC Art. 445).

Minority shareholders representing a certain proportion of the capital are also granted special rights under Turkish law. Shareholders representing at least one tenth of the capital, or one twentieth in publicly held companies, may exercise the following rights:

• Calling a General Assembly Meeting: They may request the board of directors in writing, stating the reasons and the agenda, to call a general assembly meeting or to place items they wish to have resolved on the agenda (TCC Art. 411).
• Postponing the Discussion of Financial Statements: They may require the discussion of the financial statements to be postponed by one month without the need for a general assembly resolution (TCC Art. 420).
• Action for Dissolution on Just Grounds: Where just grounds exist, they may request the dissolution of the company; instead of dissolution, the court may order the claimants to be expelled from the company against payment of the real value of their shares or another appropriate solution (TCC Art. 531).

In a limited liability company, the joint-stock company provisions on the minority’s right to call meetings and make proposals apply by analogy (TCC Art. 617/3). The protection of shareholder rights is a precondition for shareholders investing in companies with the expectation of returns on their capital; corporate law in Turkey safeguards these interests through mechanisms such as voting rights, access to company information, and the accountability of board members and executives. This protection fosters investment, builds trust and directly strengthens the company’s ability to raise capital.

7. System of Mandatory Provisions (Prohibition on Deviation from the Law) in Turkey

Freedom of structure is limited in Turkish joint-stock companies: the articles of association may deviate from the provisions of the Turkish Commercial Code on joint-stock companies only where the Code expressly permits it (TCC Art. 340). This rule is one of the main features distinguishing the joint-stock company from personal companies, whose structure the partners can largely determine by contract:

• Deviation Only with the Law’s Permission: Provisions of the articles of association that deviate from the Code where it does not expressly permit this produce no legal effect.
• Void General Assembly Resolutions: General assembly resolutions that restrict or abolish a shareholder’s rights to attend the general assembly, minimum voting rights, rights of action and other inalienable rights, restrict the rights to information, inspection and audit beyond the extent permitted by law, or destroy the basic structure of the joint-stock company are null and void (TCC Art. 447).

8. Principle of Loyalty, Care and Transparency in Turkey

The principle of loyalty, care and transparency refers to the standards of conduct that company bodies, especially board members and those who directly manage the company, must observe. By requiring board members and executives to act in the best interests of the company and its stakeholders, corporate law in Turkey promotes accountability within corporate organizations:

• Duty of Care: Board members and third parties entrusted with management must perform their duties with the care of a prudent manager and protect the company’s interests in accordance with the principle of good faith (TCC Art. 369/1); the same duty for managers of limited liability companies is set out in TCC Art. 626.
• Duty of Loyalty: Without the permission of the general assembly, a board member cannot carry out, for their own or another’s account, a commercial transaction falling within the company’s field of business (TCC Art. 396); the non-competition obligation of managers of limited liability companies is set out in TCC Art. 626/2.
• Transparency: Trade registry entries take effect against third parties from the business day following the publication of the registration in the Turkish Trade Registry Gazette (TCC Art. 36). The financial statements of companies designated by the President are subject to independent audit (TCC Art. 397), and a shareholder’s right to information and inspection cannot be abolished or restricted by the articles of association or by a resolution of a company body (TCC Art. 437/6).

These fiduciary duties demand diligence, care and loyalty in decision-making processes in Turkish companies. Financial reporting and disclosure standards, in turn, enhance transparency and prevent fraudulent practices, allowing shareholders and third parties to base their decisions about the company on accurate information.

The table below summarises the eight fundamental principles of company law in Turkey together with the provisions they rest on and their practical consequences. It does not replace the explanations above; the exceptions to each principle are set out under the relevant heading.

In conclusion, company law in Turkey provides a legal framework that governs all stages of a company’s existence, from its establishment to its dissolution. By ensuring legal compliance, security, and sustainability in corporate operations, it plays a critical role in the success and stability of businesses. Therefore, companies operating in Turkey must adhere to company law regulations to achieve both legal compliance and long-term success.

Which Laws Govern Company Law in Turkey?

The main source of company law in Turkey is the Turkish Commercial Code No. 6102, which lists collective companies, limited partnerships, joint-stock companies, limited liability companies, and cooperatives as commercial companies. Ordinary partnerships, which have no legal personality, are regulated by the Turkish Code of Obligations No. 6098. Detailed rules on the formation and operation of cooperatives are set out in the Cooperatives Law No. 1163, while the rules on publicly held companies whose shares are traded on the stock exchange are found in the Capital Markets Law No. 6362.

Company law in Turkey is a branch of private law, because the relationships it governs are the private-law relationships between the shareholders themselves and between the company and third parties on an equal footing. Nevertheless, public-law rules in areas such as the trade registry, taxation, and capital markets supervision also directly affect the activities of companies. For foreign investors setting up a company, the Foreign Direct Investment Law No. 4875 also applies.

What Are the Types of Companies in Turkey?

According to the Turkish Commercial Code, company types in Turkey cover a broad spectrum and are regulated under company law in Turkey. Primarily, companies are classified into two main categories: ordinary partnerships, regulated by the Turkish Code of Obligations, and commercial companies, regulated by the Turkish Commercial Code.

Commercial companies are further divided into subcategories, including collective companies, limited partnerships, cooperative companies, joint-stock limited partnerships, joint-stock companies, and limited liability companies. Under Turkish law, these entities engage in commercial activities and bear specific legal responsibilities.

In addition to these, Turkish law also recognizes some special types of companies that can be considered subtypes of either ordinary partnerships or commercial companies. These include holding companies, public warehouses, shipping partnerships, construction partnerships, banks, insurance companies, investment partnerships, and joint ventures.

Corporate law in Turkey governs various aspects of these company types, including their formation, operations, shareholder structures, and dissolution. Each type of company is subject to different legal regulations based on its characteristics and functions. The classification of company types is summarized in the table below:

Why Is Company Law Important in Turkey?

Company law in Turkey plays a crucial role in maintaining economic order and market security. Ensuring that companies operate within a legal framework contributes to the stability and security of investors and the business world. At the same time, it strengthens economic stability by promoting transparency and accountability in commercial activities.

The importance of corporate law in Turkey can be examined under the following key aspects:

• Legal Assurance: Company law in Turkey ensures that businesses operate in compliance with legal regulations, minimizing legal disputes between parties. By securing contract-based transactions in Turkey, partnerships, and commercial agreements, it fosters stability and trust in business life. Fair and resolution-oriented handling of disputes reinforces the rule of law in the market.
• Contribution to Economic Growth: Corporate law in Turkey provides investors with a secure and stable business environment. Legal regulations help companies strengthen their capital structures and participate more effectively in the markets. Additionally, long-term investments, the creation of new business opportunities, and employment growth are supported by a legally regulated economic system.
• Ensuring Fair Competition: By preventing unfair competition, company law helps maintain market balance. Working in parallel with competition law, it prevents monopolization and market manipulation, ensuring that both large and small companies can compete under equal conditions. Protecting consumer rights and maintaining transparency in market conditions are fundamental elements of fair competition.
• Supporting International Trade: Corporate law in Turkey facilitates the integration of multinational companies into the global economy by ensuring compliance with legal regulations. International trade agreements, foreign investments, and cross-border company operations are regulated according to national and international legal frameworks. This legal structure helps businesses comply with international regulations, ensuring the continuity of foreign investment flows and global trade.

In conclusion, company law in Turkey is one of the cornerstones of modern commerce, ensuring that businesses operate legally, efficiently, and effectively. This legal discipline plays a vital role in maintaining the continuity and security of companies and the business world, significantly contributing to economic balance, market stability, and investor confidence.

The four core functions of company law in Turkey and the result each one achieves are summarized in the table below:

What Does Company Law Cover in Turkey?

Company law in Turkey encompasses various fundamental aspects that govern the establishment, operation, and regulation of companies. The key aspects of company law in Turkey fall under the headings of formation and organization, corporate governance, shareholder rights, corporate finance, mergers and restructuring, and corporate social responsibility.

• Company Formation and Organization: Corporate law in Turkey provides the legal foundation for company formation and organization. It defines the requirements and procedures for establishing a business entity, determines its structure, and allocates rights and responsibilities among shareholders, board members, and executives. This legal framework establishes a company’s legal personality, distinguishing it from its shareholders and enabling it to engage in various business activities.
• Corporate Governance and Accountability: Corporate governance refers to the mechanisms and processes through which companies are directed, controlled, and held accountable. It defines the roles and responsibilities of board members, executives, and shareholders, aiming to ensure transparency, fairness, and accountability. Corporate governance mechanisms—including board structures, shareholder rights, and disclosure requirements—promote responsible decision-making, protect shareholder interests, and mitigate conflicts of interest.
• Shareholder Rights and Protection: Institutionalization defines and safeguards the rights of shareholders, who are the owners of a company. These rights include participating in decision-making through voting, accessing relevant company information, and receiving a fair share of profits as dividends. Additionally, corporate law in Turkey provides protection mechanisms for minority shareholders, preventing abuses of power by majority shareholders and offering remedies against oppressive or discriminatory practices.
• Corporate Finance and Securities Regulation: Corporate regulations ensure fair and transparent capital markets by establishing rules for issuing and trading securities. Companies are required to provide investors with accurate and timely information. Securities regulations also address insider trading, market manipulation, and fraudulent activities, aiming to protect market integrity and safeguard investors from unfair practices.
• Mergers, Acquisitions, and Corporate Restructuring: Corporate law in Turkey governs mergers, acquisitions, and corporate restructuring processes, providing a legal framework for these complex transactions. It outlines the procedures and requirements for obtaining shareholder approval, conducting due diligence, and ensuring fair treatment of all affected parties. The objective is to strike a balance between facilitating business transactions and protecting the interests of shareholders and other stakeholders.
• Corporate Social Responsibility and Stakeholder Management: In recent years, corporate governance has increasingly recognized the importance of corporate social responsibility (CSR) and stakeholder management. Company law in Turkey encourages companies to consider the interests of various stakeholders, including employees, communities, and the environment, beyond merely maximizing shareholder value.

The above key aspects constitute fundamental elements of this branch of law. Understanding and complying with these principles is essential for companies to operate in accordance with laws, regulations, and ethical standards while ensuring long-term sustainability in Turkey.

The matters covered by company law in Turkey and the core issue each one governs are summarized in the table below:

How Are Company Mergers, Demergers, and Conversions Carried Out in Turkey?

Under Articles 134 et seq. of the Turkish Commercial Code, a company merger in Turkey takes place either by acquisition or by the formation of a new company, and the merger becomes effective upon registration with the trade registry. In a merger by acquisition, one company takes over the other; in a merger by formation of a new company, the merging companies are transferred to a newly formed company. In both cases, the transferring company ceases to exist and is deleted from the trade registry, and its shareholders become shareholders of the acquiring company.

The law sets out the merger process in sequential steps. Since a missing step may lead to the annulment of the merger resolution or the refusal of registration, the process is carried out in Turkey in the following order:

1. Merger agreement: The management bodies of the merging companies draw up the agreement in writing.
2. Merger report and merger balance sheet: The management bodies prepare a report explaining the legal and economic reasons for the merger; an interim balance sheet is prepared if more than six months have passed between the balance sheet date and the signing of the merger agreement, or if there have been significant changes in the assets.
3. Right of inspection: The merger agreement, the report, and the financial statements of the last three years are made available for inspection by shareholders at the company’s head office and branches within the thirty days before the general assembly resolution.
4. General assembly resolution: The merger agreement is submitted for approval to the general assemblies of the merging companies.
5. Registration and announcement: The merger resolution is registered with the trade registry; the merger becomes legally effective upon registration.
6. Protection of creditors: The merging companies announce the merger to their creditors three times, at seven-day intervals, in the Turkish Trade Registry Gazette; the acquiring company secures the claims of creditors who make a request within three months of the merger becoming effective.

A simplified merger applies where the acquiring company holds all of the voting shares of the transferring company and in the other cases provided by law; in such cases, certain documents and the approval of the general assembly are not required. Under Turkish law, in a merger, the employment contracts of the transferring company’s employees also pass to the acquiring company with all their rights and obligations, unless the employee objects.

A demerger is the transfer of all or part of a company’s assets to other companies; a conversion is the change of a company into another type of company while its legal personality is preserved (for example, a limited liability company becoming a joint-stock company). In Turkey, demergers and conversions are also carried out, much like mergers, through an agreement or plan, a report, a general assembly resolution, and registration. The key differences between the three transactions are summarized in the table below:

Application of Corporate Law for Corporate Governance

Corporate law in Turkey forms the foundation of modern business regulation, providing a legal framework for company formation, management, accountability, and operations. It plays a critical role in maintaining the stability and integrity of the corporate sector, safeguarding shareholder rights, ensuring transparency, and promoting fairness.

Businesses are constantly evolving and encountering new challenges, and companies in Turkey must adapt to address emerging issues and strike a balance between commercial interests and broader societal concerns. By adhering to the principles of corporate law, it is possible to create a corporate environment that promotes economic growth, responsible business practices, and the well-being of all stakeholders.

• How Does Corporate Legislation Adapt to a Changing Business Environment in Turkey?

In Turkey and around the world, corporate legislation must adapt to the changing business environment. This involves exploring governance models that include the interests of a broader range of stakeholders, encouraging sustainability, and promoting responsible business practices. Additionally, it requires enhancing transparency and accountability through strong reporting and disclosure requirements, enabling stakeholders to make informed decisions and holding companies accountable for their actions.

Moreover, as the role of corporate law extends beyond national borders, businesses in Turkey are increasingly operating in a globalized world. International legal frameworks and compliance efforts aim to facilitate cross-border transactions, ensure consistency in regulatory standards, and provide a fair competitive environment for businesses operating internationally.

• What Does Corporate Governance Bring to a Company in Turkey?

In conclusion, corporate governance is a vital component of modern business society. By regulating the establishment, management, and operations of companies within a legal framework, it ensures accountability, transparency, and stability. By protecting shareholder rights, encouraging responsible corporate behavior, and addressing emerging challenges, it plays a crucial role in creating a business environment in Turkey that benefits not only shareholders but also employees, communities, and other stakeholders.

As the business environment continues to change, corporate law in Turkey must adapt to address new issues and strike a balance between commercial interests and societal concerns. These elements of corporate governance are summarized in the table below:

How Are Companies’ Tax Responsibilities Determined in Turkey?

The tax responsibilities of companies in Turkey are determined by the tax laws of the country where they operate, and companies must fulfill their tax obligations alongside their commercial operations. Tax responsibility in Turkey is a critical element for the sustainability and legal compliance of companies. Since taxes are the primary source of financing for public services in a state, all types of companies must fulfill their tax obligations. The tax responsibilities of companies are shaped by various legal regulations and rules.

1. What is Tax Responsibility in Turkey?

Tax responsibility in Turkey refers to the obligation of a company to fulfill the tax obligations determined by the state. This obligation includes taxes calculated based on the company’s profits, activities, production, sales, and other commercial transactions. A company’s tax responsibility not only involves paying taxes but also filing tax returns correctly, making regular payments, and acting in compliance with legal regulations.

2. What Are the Tax Obligations of Companies in Turkey?

The tax obligations of companies depend on the tax laws of the country where they operate. In Turkey, the main tax obligations are as follows:

• Corporate Tax: Companies pay corporate tax on the profits they earn from their activities. In Turkey, legal entities such as joint-stock companies and limited companies are subject to corporate tax on their earnings. Under Article 32 of the Corporate Tax Law, the corporate tax rate is 25% as a rule; a rate of 30% applies to banks, insurance and reinsurance companies, other financial institutions listed in the law, and certain project companies.
• Value Added Tax (VAT): Companies apply VAT when selling goods or services. The VAT on the sold products and services is collected by the company and paid to the tax office. Companies may deduct the VAT paid on their purchases from the VAT calculated on their sales; VAT that cannot be deducted is, as a rule, carried forward to later periods and is not refunded, except in cases listed in the law such as exempt transactions.
• Income Tax: The owner or shareholders of a company may need to pay income tax based on the company’s earnings. However, joint-stock and limited companies pay corporate tax instead of income tax. For personal companies (collective companies and limited partnerships), income tax must be paid on the income earned by the partners.
• Stamp Tax: Companies are required to pay stamp tax when preparing documents listed in Table (1) annexed to the Stamp Tax Law, such as contracts, undertakings, and lease agreements. The stamp tax varies depending on the type and amount of the document.
• Social Security and Other Worker Rights: Companies are responsible for paying the social security premiums of their employees. In addition to insurance premiums, the company is responsible for paying other premiums determined by the government, such as unemployment insurance and general health insurance. Moreover, employees’ rights, such as annual leave, severance pay, notice pay, compensation for dismissal and reinstatement lawsuit claims, are also the responsibility of the company.
• Temporary Taxes and Exemptions: Companies subject to corporate tax pay temporary (advance) tax periodically, to be offset against the corporate tax of the current period. Additionally, companies can apply for certain tax advantages and exemptions offered by the government.

The main tax and premium obligations of companies in Turkey are summarized in the table below:

3. What Are the Sanctions for Tax Violations in Turkey?

If companies fail to fulfill their tax obligations, they may face various penalties. Tax violations can include tax evasion, failure to make timely payments, or submitting incorrect declarations. In Turkey, under Article 344 of the Tax Procedure Law, the tax loss penalty is, as a rule, one times the tax lost, and three times the tax lost where the loss is caused by tax evasion (smuggling) acts. For tax returns filed late on the taxpayer’s own initiative, before a tax inspection has begun or the case has been referred to the assessment commission, this penalty is applied at fifty percent; failure to comply with formal and procedural rules is subject to a separate irregularity penalty. Furthermore, after tax audits and inspections by the Turkish tax authorities, companies may face punitive actions.

The most important regulation regarding tax offenses and violations in Turkey is the Tax Procedure Law No. 213. This law stipulates that companies must submit their tax declarations correctly and on time and outlines the penalties for companies that submit incomplete or incorrect declarations. Under Law No. 6183, public receivables that cannot be collected from the company may be collected from the personal assets of its legal representatives, and shareholders of limited liability companies are liable in proportion to their capital shares. Therefore, the company’s legal representative must be diligent about company’s tax responsibility in Turkey to prevent potential tax penalties.

4. How Are Tax Audits Carried Out in Turkey?

Companies may be subject to audits while fulfilling their tax responsibilities. In Turkey, under Article 135 of the Tax Procedure Law, tax inspections are carried out by tax inspectors, assistant tax inspectors, the chief finance officer of the province, or heads of tax offices; officials in managerial positions at the central and provincial organization of the Revenue Administration also have inspection powers. A company’s financial records and declarations can be inspected by these officials.

Audits examine the accuracy of the taxes paid by companies, whether the declared income reflects reality, and the consistency of accounting records. If a company receives an unfavorable result from a tax audit, it may face additional tax payments and penalties under Turkish tax law.

5. Why Are Tax Planning and Consulting Important in Turkey?

Companies can engage in tax planning while fulfilling their tax responsibilities in Turkey. Tax planning involves strategies that minimize a company’s tax obligations within the legal framework. Through tax planning, companies can achieve more efficient tax management, save money, and comply with tax laws. Tax consulting services in Turkey help companies develop proper tax strategies and reduce risks in tax audits.

The tax responsibility of companies in Turkey is not only a legal requirement but also of critical importance for sustainable business management. While fulfilling their tax obligations, companies must act in compliance with tax laws and ensure accurate accounting and reporting. Therefore, tax responsibility is an important area that needs to be managed properly, and with legal compliance and effective tax management, it can contribute to the long-term success of the company.

What Is the Scope of International Corporate Law?

International corporate law is the branch of law that regulates the activities of companies that cross national borders. With the influence of globalization, it has become common for companies to operate in international trade and investment, and adapting to legal regulations in different countries, including Turkey, has become critically important under Turkish Foreigners Law. This branch of law defines the legal regulations, responsibilities, and rights companies may encounter when operating internationally.

International corporate law encompasses regulations in many different areas. For companies operating in Turkey, these areas include:

1. Company Formation and Structure: The process of multinational companies establishing branches in Turkey, liaison offices or subsidiaries in different countries is subject to both national and international legal regulations. Since each country has its own commercial laws and regulations, international companies must operate within these frameworks.
2. International Contracts and Investment Law: Commercial contracts between companies and foreign countries are evaluated within the framework of international investment law. This includes matters such as bilateral investment agreements, double taxation treaties, and investor protection.
3. Compliance and Standardization: In recent years, efforts to harmonize international corporate law have gained momentum. Organizations like the International Chamber of Commerce (ICC), the Organization for Economic Co-operation and Development (OECD), and the United Nations Commission on International Trade Law (UNCITRAL) are working to encourage the harmonization of laws. These efforts aim to reduce legal complexity, optimize business processes, and enhance cross-border cooperation.
4. Competition Law and Market Regulation: Compliance with competition rules and regulations is of significant importance for international companies, particularly to prevent monopolies and maintain market order. Major markets such as the European Union and the United States rigorously enforce competition laws and require international companies to comply with them.
5. Taxation and Financial Regulations: International companies may be subject to different tax regulations in the countries they operate in. Regulations developed by the OECD, such as the BEPS (Base Erosion and Profit Shifting) framework, guide international taxation policies aimed at preventing multinational companies from avoiding tax by artificially shifting profits to low or no-tax jurisdictions. Money transfers from abroad to a company account may also become the subject of a suspicious transaction review by banks and MASAK if their source cannot be documented.
6. Environmental and Social Responsibility Regulations: The environmental impacts and social responsibilities of global companies are regulated within the framework of international law. Voluntary initiatives such as the United Nations Global Compact call on companies to align their strategies and operations with universal principles on human rights, labour, the environment, and anti-corruption.
7. Management of International Workers: Employees in international companies may be subject to different regulations depending on the country in which they operate and their employment status. For instance, the salary of an employee working in a liaison office in Turkey may be exempt from income tax under Article 23/14-a of the Income Tax Law, provided that it is paid in foreign currency by an employer whose legal and business center is not in Turkey, out of its earnings obtained outside Turkey, while an expatriate employee may be subject to tax obligations in both the country where they are assigned and their home country. Similarly, workers in Turkey who receive their salary from abroad are subject to special regulations, and their social security and tax obligations may differ.
8. Emerging Trends and Future Directions: Globalization, digitalization, and changing business models have introduced new challenges. Issues such as data protection, cybersecurity, e-commerce, and sustainable business practices require constant adaptation and the development of legal frameworks. International cooperation among governments, regulatory bodies, and businesses is crucial to effectively address these emerging trends.

International corporate law plays a critical role in ensuring that global trade is conducted in an orderly and transparent manner. It aims to ensure that companies operate with legal security, protect investor rights, maintain fair competition, and sustain stable international commercial relationships. These goals are fundamental to the field of international corporate law as applied in Turkey.

The areas regulated by international corporate law and the main regulations in each area from a Turkish perspective are summarized in the table below:

Can Companies Purchase Real Estate in Turkey?

In Turkey, companies can purchase real estate for commercial or investment purposes. Properties such as houses, land, buildings, and shops can be bought in the name of the company and recorded as business assets. However, this process is subject to specific rules, including accounting, tax regulations, and real estate law in Turkey.

1. How Do Companies Acquire and Account for Real Estate in Turkey?

Company owners or partners can purchase real estate in Turkey in the company’s name and account for it in the business’s assets. In the process of acquiring real estate by companies in Turkey, depending on the purpose of the property, it must be recorded under different accounting accounts:

• Buildings purchased for investment purposes are recorded under the “252 Buildings” account; for concrete, masonry, and steel buildings the useful life is 50 years, so they are depreciated at a rate of 2% per year.
• Real estate bought for resale (commercial purposes) is recorded under the “153 Commercial Goods” account.

When purchasing real estate in Turkey, the company must submit a property tax notification to the municipality where the property is located, since a change of taxpayer is a ground that alters the tax value; the notification is submitted within the year of the change, or within three months if the change occurs in the last three months of the year. As long as the accounting records are compliant with the regulations, there should be no issues regarding taxes.

2. Can Foreign Companies Acquire Real Estate in Turkey?

It is possible for foreign-capital companies to acquire real estate in Turkey; however, this is subject to special regulations under Turkish legislation and, in some cases, prior approval. Under Article 36 of the Land Registry Law, companies established in Turkey in which foreign investors hold fifty percent or more of the shares, or have the power to appoint or dismiss the majority of the managers, may acquire real estate in order to carry out the business activities stated in their articles of association. Their acquisitions in military prohibited zones and military security zones are subject to the permission of the General Staff or the commands it authorizes, and their acquisitions in special security zones are subject to the permission of the governorship where the property is located.

Commercial companies incorporated abroad under the laws of their own countries, on the other hand, may acquire real estate directly only within the framework of special laws under Article 35 of the Land Registry Law; for this reason, foreign companies usually acquire real estate by establishing a company in Turkey. However, since companies established in Turkey by foreign investors are also considered “foreign-capital companies,” they must still comply with the limitations and authorization requirements set out in the relevant legislation concerning real estate acquisition.

3. Who Can Use Real Estate Purchased in the Company’s Name in Turkey?

A real estate property acquired in the company’s name in Turkey can be used by company partners or employees. However, there are different tax and accounting implications depending on the usage:

• Company partners or employees can reside in a property purchased in the company’s name.
• If the resident is a company partner and a salaried employee, the rent is added to the employee’s salary.
• The determination of the rental value must be done in accordance with Article 13 of the Corporate Tax Law and the “Transfer Pricing Notification No. 1.”

Under Article 23/9 of the Turkish Income Tax Law, the benefit provided by allocating a residence owned by the employer with a gross area not exceeding 100 m² to an employee as accommodation is exempt from income tax. However, the exemption does not apply to the part of the property exceeding 100 m².

If the company partner is not a salaried employee, a rental invoice must be issued with VAT at the general rate (20%), and rent must be collected based on the fair rental value under Turkish tax rules. The consequences depending on the type of use are summarized in the table below:

4. What Are the Advantages of Purchasing Real Estate in Turkey in the Company’s Name?

Purchasing real estate in Turkey can provide both financial and tax benefits for companies:

• Depreciation Advantage: A purchased building is recorded as a fixed asset and can reduce the company’s taxable profit by showing depreciation expenses. For concrete, masonry, and steel buildings, depreciation can be applied over 50 years (2%).
• Tax Benefits: The VAT exemption under Article 17/4-r of the VAT Law for the sale of real estate held in a company’s assets for at least two full years was abolished by Law No. 7456 as of 15 July 2023; the exemption continues to apply only to the sale of real estate that was already in the company’s assets before that date. For real estate that was in the assets before the same amendment and held for at least two full years, a 25% corporate tax exemption may apply to the sale gain under Article 5/1-e of the Corporate Tax Law; in that case, the exempt portion of the gain must be kept in a special fund account in the balance sheet until the end of the fifth year following the year of sale. These exemptions do not apply to the sale of real estate acquired after that date.
• VAT Refund and Offsetting: VAT paid for properties used as business premises can be offset against VAT charged on future rental or sales invoices. This reduces the VAT cost for the company.
• Usage as a Company Expense: Expenses related to company employees residing in the property (such as painting or renovations) can be deducted as business expenses. If the property is used by a company partner, the fair rental value must be calculated and recorded as company income. If the property is rented out to a third party, the entire rental income in Turkey is recorded as company income.
• Balance Sheet Strengthening: Properties recorded as assets strengthen the company’s financial position on the balance sheet. This can help with obtaining credit or enhancing financial credibility. A mortgage can be placed on the acquired property to provide financing for the company.
• Tax Deduction of Loan Interest: If the property is purchased with a bank loan, interest paid on the loan and Banking and Insurance Transactions Tax (BSMV) can be considered as company expenses under Article 40 of the Income Tax Law.

The advantages of purchasing real estate in the company’s name in Turkey and the condition for each are summarized in the table below:

5. What Should Companies Consider When Purchasing Real Estate in Turkey?

The main considerations when purchasing real estate for companies in Turkey are record keeping, the purpose of use, tax compliance, the balance sheet impact, and any existing lease relationship. These points are specific to company purchases, in addition to the general checks for buying property in Turkey, and each of them is explained below:

• Proper Tax and Accounting Records: After purchasing real estate in Turkey, the accounting must be done correctly, and tax obligations must be met. The purchase price recorded in the accounts must match the price declared at the land registry; declaring a lower sale price at the land registry in Turkey creates a risk of tax loss for both the purchasing company and the seller.
• Purpose of Use: If the real estate is to be purchased for investment purposes, it must be tracked in different accounting accounts compared to real estate for commercial use.
• Compliance with Tax Regulations: Fair rental value calculations and VAT exemptions in Turkey must be correctly applied.
• Impact on the Company’s Balance Sheet: The property should be acquired according to the company’s long-term strategic goals.
• Lease Relationship: A property purchased by a company may already have an existing tenant. In such cases, the company becomes a party to the lease agreement and is deemed to have assumed the existing lease relationship with the tenant. Matters such as tenant eviction in Turkey, eviction undertakings, and rent increase rates remain governed by the terms of the current lease agreement. Therefore, after the acquisition of the property, the tenant’s rights in Turkey must be respected, and all actions should be taken in compliance with lease law.

It is possible for companies to acquire real estate in Turkey, and if managed correctly, this process offers many opportunities, from VAT advantages and depreciation expenses to strengthening financial structure and rental income. However, it is critical that the acquisition is aligned with the company’s business purpose, properly accounted for, and complies with tax obligations.

Moreover, since factors such as the characteristics of the purchased property, any annotations or declarations registered in the land registry in Turkey, and the actual market value may affect the property’s overall worth, it is important to seek assistance from a Turkish real estate attorney. A legal review identifies in advance the property’s title deed type and zoning status, as well as any encumbrances and lease dispute risks that may arise after the purchase.

How Are Corporate Law Disputes Resolved in Turkey?

The dispute resolution methods arising from corporate law in Turkey are conciliation and mediation, arbitration, the judicial process, and expert opinion and consultancy services. Corporate law is an essential legal field that regulates the legal issues that may arise during the establishment, operation, and liquidation of companies.

However, various disputes may occur among shareholders, managers, employees, and other stakeholders during the course of a company’s activities. Effectively and fairly resolving such disputes is crucial for ensuring the sustainability of the company and protecting commercial security. Dispute resolution methods in Turkey arising from corporate law can be examined under the following headings:

1. What Are Conciliation and Mediation Methods in Turkey?

Today, many commercial disputes are resolved through alternative dispute resolution methods before resorting to court. Conciliation and mediation processes in Turkey are methods where the parties come together to resolve their disputes through mutual negotiation.

• Mandatory Mediation: Under Article 5/A of the Turkish Commercial Code, since 1 January 2019, applying to a mediator before filing a lawsuit has been a precondition for commercial lawsuits concerning receivables, compensation, annulment of objection, negative declaratory and restitution claims whose subject is a sum of money. In its decision Turkish Court of Cassation (Yargıtay) 3rd Civil Chamber, E. 2024/507, K. 2024/1095, dated 11.03.2024, the Court reversed in the interest of the law a judgment rendered after the court continued the proceedings in an action for annulment of objection that had been filed without applying to a mediator and transferred to the commercial court by a decision of lack of jurisdiction, holding that the case had to be dismissed on procedural grounds for lack of the precondition under Article 18/A of Law No. 6325. Mediation should therefore not be treated as a defect that can be remedied after the lawsuit is filed. The mandatory mediation process allows the parties to reach a resolution quickly and at a low cost.
• Voluntary Mediation: Even if mediation is not required, the parties can voluntarily opt for mediation before filing a lawsuit or during the litigation process to reach a settlement.

2. How Does Arbitration Work in Turkey?

Arbitration is a method that allows parties to resolve their disputes through independent arbitrators rather than the Turkish state courts. Arbitration is preferred in international trade due to its neutrality, expertise, and flexibility.

• National Arbitration: In Turkey, institutions like the Istanbul Arbitration Center (ISTAC) facilitate the fast and effective resolution of commercial disputes between companies.
• International Arbitration: Disputes between multinational companies are typically resolved through institutions such as the International Chamber of Commerce (ICC) Arbitration Court and the International Centre for Settlement of Investment Disputes (ICSID), or under the UNCITRAL Arbitration Rules prepared by the United Nations Commission on International Trade Law. UNCITRAL is not an arbitral institution; its rules are widely used in both administered and ad hoc arbitrations.

3. Which Courts Hear Corporate Disputes in Turkey?

Disputes arising from corporate law in Turkey are heard by commercial courts. If alternative dispute resolution methods fail, the parties may resort to legal channels for resolution in Turkey.

• General Courts: General disputes within the scope of corporate law are resolved in civil commercial courts.
• Specialized Courts: In some cases, companies governed by specific regulations, such as capital markets law, may be tried in specialized courts.

While the court process is often lengthy and costly, it provides binding decisions that ensure legal security. In Turkey, the judicial process is the final stage for parties who want the dispute to be settled by a final judgment.

4. What Do Expert Opinion and Consultancy Services Provide in Turkey?

Companies can seek expert opinions or consultancy services from legal advisors or experts to prevent disputes or resolve existing disputes in Turkey. Expert opinion helps clarify the technical or legal aspects of a dispute at an early stage:

• Legal Consultancy: Consulting legal experts when drafting contracts and legal procedures helps companies prevent potential conflicts.
• Expert Reports: The opinion of an expert in technical or financial matters can help the parties better understand the legal process.
• Internal Dispute Resolution Mechanisms: Some companies set up internal procedures and mechanisms to resolve disputes within the organization. These may include an internal dispute resolution committee, ombudsman, or complaint management processes. Such mechanisms can help resolve disputes before they escalate and maintain relationships among employees or stakeholders.

Disputes arising from corporate law are inevitable due to the nature of commercial relationships. However, effectively resolving these conflicts is vital for maintaining a secure business environment. Various dispute resolution methods, such as conciliation and mediation, arbitration, and judicial processes, allow parties to choose the most suitable method in terms of time and cost. Additionally, companies that seek legal consultancy to manage potential risks proactively in Turkey are likely to reduce the chances of encountering legal issues in the long run.

The key features of the dispute resolution methods in Turkey are compared in the table below:

What Are the Types of Lawsuits Under Corporate Law in Turkey?

In the field of Commercial and Corporate Law, various types of lawsuits exist to address the legal issues that businesses and companies may face. These lawsuits can be filed to maintain order in the commercial life of companies and to protect their legal rights. Below are the primary types of lawsuits under corporate law in Turkey:

1. Unfair Competition Lawsuits: These lawsuits are filed to prevent unfair competition in commercial activities between companies. Such lawsuits can be filed if one company damages the commercial reputation of another, engages in imitation, or gains an unfair advantage in business practices. Unfair competition disturbs market balance, and these lawsuits aim to protect competition.
2. Bankruptcy and Concordat (Konkordato) Proceedings: These proceedings are brought when a company is experiencing financial difficulties and seeks bankruptcy or a concordat. Bankruptcy lawsuits occur when a company is unable to pay its debts and is on the brink of financial collapse. Under Article 285 of the Enforcement and Bankruptcy Law, a debtor who cannot pay its debts when due, or is at risk of being unable to do so, may request a concordat from the commercial court in order to pay its debts through deferral or reduction or to avoid a possible bankruptcy; the former postponement of bankruptcy procedure was abolished in 2018 by Law No. 7101.
3. Debt Recovery Lawsuits: These lawsuits are filed by companies to recover debts from other companies or individuals in their commercial relationships. Debt recovery lawsuits come into play when one company demands the payment of money owed by another party.
4. Lawsuits for the Prevention of Trade Name Infringement: A company’s trade name is a valuable brand asset. If another company or individual uses the trade name without permission, a lawsuit can be filed. These lawsuits aim to protect the trade name and prevent trademark infringement in Turkey.
5. Tax Law-Related Lawsuits: These lawsuits are filed when a company fails to fulfill its tax obligations or encounters disputes with tax authorities. Disagreements over tax fines, tax liabilities, or tax base assessments are addressed in these lawsuits.
6. Lawsuits Against Board Members’ Liability: In joint-stock companies lawsuits are filed against board members, and in limited liability companies against managers, for their responsibilities towards the company, its shareholders, and its creditors. These lawsuits are filed if board members misuse their duties, cause harm to the company, or fail to meet legal obligations.
7. Lawsuits for the Annulment of General Assembly Decisions: Shareholders who believe that the decisions made at a company’s general assembly violate the law, the company’s articles of association, or the principle of good faith can file lawsuits to annul these decisions. The goal of these lawsuits is to nullify the general assembly’s resolutions.
8. Shareholder Disputes: Disputes between the shareholders of a company typically arise over issues like management, profit distribution, company policies, or strategic decisions. Such lawsuits are common in joint-stock and limited liability companies and involve matters such as the transfer of shares, voting rights, or influence over company management. Shareholder disputes can significantly affect the company’s operations and may need to be resolved through legal proceedings.
9. Lawsuits Arising from Corporate Relationships Between Legal Entities: These lawsuits are filed to address disputes arising from the partnership or relationship between two or more companies. Issues such as financial disputes, legal liabilities, or work-sharing conflicts during the partnership lead to these lawsuits.
10. Company Liquidation and Dissolution Lawsuits: Where there are just grounds, shareholders representing at least one-tenth of the capital (one-twentieth in publicly held companies) in a joint-stock company, and any shareholder in a limited liability company, may ask the court to dissolve the company. A company also ends for other reasons listed in the law, such as the opening of bankruptcy or a general assembly resolution. Proper management of the liquidation process is essential for fulfilling all rights and obligations, and such lawsuits are important in ensuring the correct handling of this process.
11. Lawsuits Arising from Commercial Contracts: Companies enter into commercial contracts with suppliers, business partners, customers, or other entities. When these contracts are violated, lawsuits may be filed. These lawsuits typically involve issues such as payment, delivery, quality, and compliance with the terms of the contract.
12. Lawsuits for the Protection of Investor Rights: Investors, especially in joint-stock companies, may file lawsuits to protect their shares and ensure their rights are not violated. Lawsuits are also frequently filed to ensure transparency and accountability in company management, as investors have a right to hold the company accountable.
13. Intellectual Property Rights Infringement Lawsuits: Companies may file lawsuits to protect their trademarks, patents, designs, and other intellectual property rights in Turkey. Intellectual property rights infringement, especially when combined with unfair competition, can have severe legal consequences, making these lawsuits crucial.

Corporate law-related lawsuits in Turkey are not limited to the above. Depending on the specific circumstances, companies may need to evaluate the situation with the help of a specialized Turkish commercial law attorney to start the legal process and find solutions to their legal problems.

What Is the Liability of Board Members in Turkey? (TCC Article 553)

Under Article 553 of the Turkish Commercial Code, founders, board members, executives, and liquidators are liable to the company, the shareholders, and the company’s creditors for the damage they cause if they breach, through their fault, the obligations arising from the law and the articles of association. Liability is based on fault; no one can be held liable for breaches of the law or the articles of association, or for irregularities, that are beyond his or her control. The same provisions apply to the liability of managers of limited liability companies.

The liability lawsuit may be filed by the company, and shareholders and company creditors may also file a lawsuit for their own direct damage. A shareholder may also sue for the damage suffered by the company; in that case, the shareholder may only request that compensation be paid to the company. Under Turkish law, if the company goes bankrupt, company creditors may also exercise the right to request payment to the company.

In its decision Turkish Court of Cassation (Yargıtay) 11th Civil Chamber, E. 2016/8582, K. 2017/5489, dated 18.10.2017, the Court stated that, where the shareholders of a limited liability company asked for the indirect damage suffered by the company through the managers’ acts to be paid to themselves, the claim had to be dismissed under Article 555 of the TCC; the decision expressed this by holding that the claim had to be dismissed because the shareholders could only request that compensation be paid to the company, yet had asked for it to be paid to themselves. The limitation period for a liability lawsuit is two years from the date on which the claimant learned of the damage and the person liable, and in any event five years from the act causing the damage. If the act constitutes a crime subject to a longer limitation period under the Turkish Criminal Code, that period also applies to the compensation claim; the lawsuit may be filed before the commercial court where the company’s head office is located.

When Must a Lawsuit for the Annulment of General Assembly Resolutions Be Filed in Turkey?

A lawsuit for the annulment of general assembly resolutions that violate the law, the articles of association, and in particular the principle of good faith must be filed within three months from the date of the resolution before the Turkish civil commercial court where the company’s head office is located. Under Turkish law, the three-month period is a strict time limit; once it expires, the resolution can no longer be challenged by an annulment lawsuit. The rules for joint-stock companies also apply by analogy to the annulment of general assembly resolutions in limited liability companies.

Not being duly invited to the meeting is, as a rule, also a time-limited ground for annulment. In its decision Turkish Court of Cassation (Yargıtay) 11th Civil Chamber, E. 2020/7146, K. 2022/894, dated 08.02.2022, the Court upheld the regional court of appeal’s decision dismissing the case on the grounds that the failure to duly invite a shareholder of a limited liability company to the general assembly meeting was not a ground for nullity, and that the lawsuit concerning the meeting of 28.12.2016, filed on 17.10.2018, was brought after the three-month time limit had expired. A shareholder who learns of a defective invitation in Turkey should therefore file the annulment lawsuit in time rather than wait in reliance on an argument of nullity.

Under Turkish law, the right to file an annulment lawsuit is granted to a limited number of persons. Shareholders who attended the meeting, voted against the resolution, and had their dissent recorded in the minutes; shareholders who did not attend but claim that the meeting was not duly called or that the agenda was not properly announced, and that these irregularities affected the resolution; and the board of directors may file the lawsuit. Each board member may also file a lawsuit if implementing the resolution would give rise to his or her personal liability. By contrast, null and void resolutions, such as resolutions that eliminate a shareholder’s inalienable rights, may be the subject of a declaratory action before the Turkish courts at any time, without being bound by the three-month period.

How Does a Shareholder Withdraw from or Get Expelled from a Limited Liability Company in Turkey?

In a limited liability company in Turkey, a shareholder may withdraw on the grounds set out in the articles of association or, where there are just grounds, ask the court for permission to withdraw. Under Turkish law, withdrawal is based on the shareholder’s unilateral intention to leave the company, and if the articles of association do not provide a separate right of withdrawal, just grounds and a court decision are required. The withdrawing shareholder is, as a rule, entitled to a severance payment corresponding to the real value of his or her capital share; where withdrawal is based on a right in the articles of association, the articles may regulate the severance payment differently.

How the severance payment is calculated is the most frequently disputed issue in practice. In its decision Turkish Court of Cassation (Yargıtay) 11th Civil Chamber, E. 2016/2571, K. 2017/5023, dated 04.10.2017, the Court accepted that the withdrawal claim in a limited liability company whose shareholders could no longer meet and take decisions after their divorce was based on just grounds; however, it reversed the lower court’s judgment by majority vote because the severance payment had to be determined by establishing the real value of the company’s assets as of the date closest to the judgment, not the balance sheet value in the company’s books.

The expulsion of a shareholder from the company, on the other hand, takes place by a general assembly resolution in the cases provided for in the articles of association. The shareholder may file an annulment lawsuit against the expulsion resolution within three months of being notified of it through a Turkish notary. If the articles of association contain no such ground, the company may ask the court to expel the shareholder where there are just grounds. Disputes over withdrawal and expulsion are among the shareholder disputes most frequently brought before the Turkish courts.

Which Companies Are Required to Have a Lawyer in Turkey?

The obligation to have a lawyer is explicitly stated in the Law No. 1136 on the Legal Profession. Under Article 35 of this law, joint-stock companies with share capital of five times or more the minimum share capital set by the Turkish Commercial Code and building cooperatives with one hundred or more members are required to employ a contracted lawyer in Turkey. Since the minimum share capital for joint-stock companies is TRY 250,000, this threshold is TRY 1,250,000; entities that fail to comply are subject to an administrative fine for each month in which they do not appoint a contracted lawyer. However, this obligation does not apply to limited liability companies or partnerships.

In other words, having a lawyer is not a requirement for all companies engaged in commercial activities in Turkey, but in certain situations, having legal counsel can be beneficial and necessary. For larger or more complex companies in particular, having a lawyer is highly important for managing legal processes correctly; legal support helps manage the greater number of legal obligations and legislative changes they are subject to.

Why Is It Important for Companies to Work with a Corporate Lawyer in Turkey?

Working with a company lawyer in Turkey is of great importance for minimizing legal risks, ensuring legal compliance, and taking preventive measures against potential lawsuits. The legal processes and commercial operations of companies are becoming increasingly complex. Companies operating in the business world are required to comply with various legal regulations and legislation at both the local and international levels.

At this point, working with a corporate lawyer is of great importance in order to minimize legal risks, ensure legal compliance, and take preventive measures against potential lawsuits. A corporate lawyer not only addresses the company’s legal needs but also supports its business strategies, contributes to its long-term success, and provides guidance on the management of employees within the scope of Turkish labor law. For foreign shareholders and investors, working with an English-speaking lawyer in Turkey also ensures that corporate documents, contracts, and court proceedings are followed without a language barrier.

1. How Are Legal Risks Reduced and Managed?

Companies face numerous legal risks in their operations, such as issues with commercial contracts, labor law problems, intellectual property rights infringements, and unfair competition. A company lawyer in Turkey identifies these risks early on and takes legal measures to minimize them. They also ensure that contracts are legally compliant and help the company meet all its legal obligations, preventing potential lawsuits.

2. Why Are Contract Drafting and Review Important?

Companies enter into various contracts with suppliers, customers, partners, and employees. Proper preparation and protection of the parties’ rights in these contracts are essential. A corporate lawyer reviews these contracts under Turkish law, preventing potential disputes.

At the same time, the lawyer ensures that the terms are enforceable and compliant with Turkish law. By reviewing contract details, they help prevent financial losses and legal complications.

3. How Are Tax Compliance and Legal Consulting Ensured?

Tax law is one of the most critical areas for companies and can often be complex and subject to change. A corporate lawyer provides guidance on fulfilling tax obligations and helps minimize the tax burden within Turkish legal limits. They also develop strategies to protect the company from tax audits or penalties.

4. How Are Employee Rights and Labor Relations Managed?

Companies have legal responsibilities when managing their relationships with employees. Labor laws, social security obligations, workers’ rights, recruitment, wrongful termination, overtime work and vacation entitlements must be followed within constantly changing Turkish legal frameworks. A company lawyer drafts employment contracts in line with legal standards and ensures compliance with workplace regulations. They also offer legal support in case of disputes, protecting the company from potential lawsuits. Since allegations of mobbing in the workplace may, under Turkish labor law, lead the employee to terminate the employment contract for just cause and claim compensation, it is important that internal complaint and prevention mechanisms are set up correctly.

5. How Are Business Strategies Supported Legally?

A corporate lawyer doesn’t only deal with legal issues; they also play an essential role in supporting business strategies. For example, in mergers, acquisitions, restructuring, or international expansion, a company lawyer ensures that these processes comply with Turkish law. They assess whether future commercial activities might pose legal risks and advise accordingly.

6. How Are Legal Disputes Resolved?

Every company encounters legal disputes from time to time, whether related to contract breaches, unfair competition, labor relations, or intellectual property rights. A corporate lawyer in Turkey manages these disputes and, where necessary, represents the company in litigation to protect its interests. They can also develop strategies to resolve issues before they escalate to litigation, such as through mediation or settlement.

7. How Is Compliance with International Trade and Regulations Ensured?

Companies involved in international trade must comply with the legal regulations and trade agreements of the countries in which they operate. A corporate lawyer in Turkey tracks the trade laws of these countries and international treaties, managing the company’s legal risks. They also ensure that contracts and trade activities in foreign operations are legally sound.

8. How Are Privacy and Data Protection Ensured?

Companies gather and process large amounts of data, including customer information, trade secrets, and internal documents. A company lawyer ensures compliance with data protection laws and drafts confidentiality agreements to protect company information. In case of a data breach, the lawyer will defend the company legally under Turkish law.

Working with a corporate lawyer in Turkey is not just a legal requirement but also a strategic investment for the long-term success of the company. Managing legal risks, ensuring tax compliance, securing commercial contracts, and addressing complex issues like labor rights are all areas where professional legal support can enhance a company’s operations and prevent legal problems. Corporate lawyers play a critical role in ensuring a company’s healthy growth and sustainability and help it manage every situation from a legal perspective. For larger or more complex Turkish companies, having a lawyer on board is essential to manage the legal processes effectively and meet regulatory obligations.

In Which Areas Do Companies Need Legal Consultancy Under Corporate Law in Turkey?

Corporate law is a broad area that requires legal support and consultancy at every stage of a company’s operations. To ensure the smooth continuation of commercial activities, companies in Turkey need expert legal consultancy on various issues such as contract drafting, mergers and acquisitions, debt collection, and many other matters.

The main consultancy services provided under Turkish corporate law include:

1. Collection of Commercial Debts and Consultancy for Companies: Legal consultancy is provided for companies in recovering their commercial debts in Turkey, tracking receivables, and handling related legal processes.
2. Legal Consultancy on Mergers, Divisions, and Transfers: Companies undergoing mergers, divisions, or transfers receive legal support to ensure that these processes are completed smoothly and in compliance with the law.
3. Agency and Distribution Agreements: Consultancy services include drafting, signing, auditing, and managing legal cases related to agency and distribution agreements, which govern the relationships for product distribution and marketing between parties.
4. Financial Leasing Contracts: Legal support is provided in drafting, signing, and auditing financial leasing agreements and managing any related legal disputes.
5. Letter of Intent and Offer Letters: Consultancy on the preparation and evaluation of letters of intent and offer letters used in business negotiations.
6. Share Transfer Agreements and Partnership Agreements: Legal services are provided for drafting share transfer agreements and partnership contracts to regulate share transactions and business structures.
7. Confidentiality Agreements: Legal support is offered in preparing confidentiality agreements and personal data protection agreements to safeguard a company’s trade secrets.
8. General Sales Terms, General Purchasing Terms, Sales, and Purchase Contracts: Companies receive assistance in drafting and auditing purchase and sales contracts, along with general terms and conditions for commercial transactions.
9. Loan Contracts: Legal consultancy is provided for companies in preparing and auditing loan agreements used for obtaining financial resources.
10. Partnership Structures and Representation Structures: Legal support is offered to companies in structuring their ownership and governance models.
11. Regular and Extraordinary General Assembly Preparations and Meetings: Legal guidance is provided for organizing general meetings in accordance with legal requirements and ensuring that necessary decisions are made.
12. Board of Directors Meeting Consultancy: Legal advice is offered to ensure that the board of directors meetings are conducted within a legal framework.
13. Compliance of Public Companies with CMB Regulations: Consultancy is provided to ensure that publicly traded companies comply with the regulations of the Capital Markets Board (CMB).
14. Capital Increase and Decrease: Legal support in Turkey is given for companies making changes to their capital structure through capital increase or decrease.
15. Change of Company Type: Legal consultancy is provided when companies wish to change their business type.
16. Corporate Operations Consultancy: This includes preparing corporate documents such as board decisions, signature circulars, and amending the company’s articles of association.
17. Legal Disputes and Transactions Arising from Securities Law: Consultancy is offered for companies involved in securities-related transactions and any related legal disputes.

These consultancy services are critical for companies in Turkey to effectively manage their legal processes and ensure compliance with legal requirements, contributing to smooth operations and minimizing potential legal risks.