Enacted in 2003, the new Foreign Direct Investment Law (Law No: 4875) underlines the key elements of the liberal investment environment in Turkey.  This new Foreign Direct Investment Law clearly reflects Turkey's balanced and liberal approach to international investments. It is the 'legal guide”, complete with very explicit explanations, to international investors concerning their rights and obligations. This new Law guarantees that investors have the right to be treated as national companies and that they hold comprehensive investor rights. All companies established with a foreign capital contribution and which are set up under the rules of the Turkish Commercial Code (applies to existing as well as newly established foreign companies) are looked upon as Turkish companies. Therefore, such companies will bear equal treatment both as regards rights and responsibilities as stated in the Constitution and other laws (this includes treatment as nationals, a guarantee against expropriation without compensation, a guarantee against the transfer of proceeds, access to real estate and to expatriate personnel, and access to international arbitration or any other means they may wish to have in case of dispute).

Furthermore, in 2003, important amendments to various laws (Commercial Law and in the laws concerning the Employment of Foreigners, the Registry of Title Deeds and Public Procurement )  were also passed by  Parliament.

The new legislation removed the screening and pre-approval procedures for FDI projects; re-designed the company registration process on an equal basis for domestic and foreign firms; facilitated the hiring of foreign employees; included FDI firms in the definition of 'domestic tenderer” in public procurement; and authorised foreign persons and companies to acquire real estate in Turkey

The employment of foreign personnel is possible in Turkey. 'The Law on Work Permits of Foreigners (Law No: 4817)' regulates permits for the employment of  foreigners in Turkey and governs the principles of work permits to be issued for these foreigners. In order to work and reside in Turkey, foreigners must obtain a work permit from the Ministry of Labour and Social Security and, at the same time,  obtain a residence permit from the Ministry of Internal Affairs.

There are some limitations on job categories for employing foreigners. Only Turkish citizens can work as doctors, dentists, midwifes, nurses, pharmacists and veterinary surgeons, notaries, certified public accountants, attorneys, managers in charge of hospital administration, managers responsible for pharmaceutical factories,  private security officers, and  legal representatives of private employment officers.

What are the Labour Regulations in Turkey? 

There are three laws that regulate labour relations:

• The Labour Law No. 4857
• The Maritime Labour Law No. 854
• The Press Labour Law No 5953

According to Labour Law No. 4857 it is obligatory to sign a contract for recruiting employees for not less than one year.

The official working time in Turkey is 45 hours per week. Upon the agreement of parties, the total working time can be allocated in different combinations to the working days, provided that the working hours shall not exceed 11 hours a day. Upon 45 hours per week is the overtime. Overtime may not exceed 270 hours per year. Usual overtime rates involve a 50% daytime premium on weekdays and Saturdays and 100% on Sundays and public holidays.

What is the Procedure for Establishing a Business in Turkey?

Establishing a business in Turkey

The new Law No. 4884/2003 (Amendments on Company Establishment) has redesigned the  process for company registration. It has also  reduced and simplified the steps required to set up a business. Now, with the streamlined procedures, the registration and establishment of a company can be completedt in one day.   All that is required is to fill out a standard form at one location. It is no longer necessary to apply to several different authorities for approvals.

Applications for the establishment of a company establishment must be filed with the  Ministry of Industry[1] and Trade, or with the Provincial Trade Registration offices working under the Trade and/or Industry Chambers(to be found throughout Turkey). Investors should follow the steps mentioned below :

• Submit the notarized articles of association
• Deposit  0.04 % of the capital at Ziraat Bank
• Complete the Company Establishment Form
• Register with a Trade Registry Office

Foreign bona fide persons or legal entities are free, just like local investors, to establish any form of company included in the Turkish Commercial Code. It is no longer obligatory to establish either a limited liability company or a joint stock company.
 

1] Branch offices; banks and financial institutions; insurance companies;, leasing and factoring companies; companies subject to capital market law;  public held corporations; public warehouses (hyper /wholesale (?) markets); holdings. Companies operating currency exchange business and companies operating free trade zones should send the  application for  their establishment and any alterations in the articles of association to the Ministry of Trade and Industry in Ankara. Other joint stock and limited companies should file their applications with the Provincial Trade Offices of the place where their headquarters are located.

What is the Procedure for the Establishment of Liaison Offices?

The Undersecretariat of the Treasury is authorized to grant permits to companies and to extend such permits to companies established in accordance with the laws of their country of origin to open liaison offices in Turkey, provided that they do not carry out commercial activities in Turkey.

Applications made by foreign companies to establish liaison offices in order to operate in sectors subject to special legislation (such as money and capital markets, insurance, etc.) will be assessed by the authorities and institutions authorized by the relevant special legislation.

Application Documents 

To establish a liaison office in Turkey the following documents have to be submitted to the Undersecretariat of the Treasury, the General Directorate for Foreign Investment :

• The original of “The Certificate of Activity” approved by the relevant Turkish Consulate or approved in accordance with the provisions of the Convention on the Abolishment of the Requirement of Legalization for Foreign Official Documents Approval Obligation (prepared on the basis of the Hague Conference on International Private Law)

• The operational report or balance sheet and income statement of the main company,

• The original of the power of authority issued in the name of the person who is appointed to carry out the operations of the liaison office,

• The original of the power of attorney in the case where another person will carry out the establishment transactions for the liaison office.

Source:

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