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Company Establishment 

LAW ON AMENDMENTS TO BE MADE IN TURKISH COMMERCIAL CODE, PROCEDURAL TAX LAW, STAMP DUTY LAW, LABOUR LAW AND SOCIAL SECURITY LAW 
  
Law No. 4884 
Date of Endorsement : 11.06.2003 

ARTICLE 1- First paragraph of Article 69 of Turkish Commercial Code No: 6762 dated 29/06/1956 has been amended to read as follows:

At the establishment stage of a company, the company books designated in Paragraph1 of Article 66 have to be presented to the trade registry office functioning at the location of the commercial enterprise headquarters or the notary, by the entrepreneur, before using. These books will be endorsed and signed so as to enclose the data stipulated in the provisions regularizing the endorsement of books in the Tax Procedural Law No: 213. Trade registry officer or the notary will inscribe the number of pages constituting each book on its first page and certify thereof with official stamp and his signature. The kind and number of the books/ledgers endorsed by notaries and the names of their owners have to be notified to the related trade registry office within seven days latest. Company books/ledgers for the subsequent year and other books/ledgers will be endorsed according to the provisions regularizing the endorsement of books in the Procedural Tax Law No: 213.

ARTICLE 2- Article 273 of Law 6762 has been amended to read as below:

Article 273 – Establishment of joint stock companies to engage in activities that will be determined and announced by the Ministry of Industry and Commerce are subject to the permit of the Ministry. Amendments to the articles of associations of such companies shall also be subject to the approval of the Ministry. Establishment of other joint stock companies and amendments to the articles of association of these are not subject to permit of the Ministry.

ARTICLE 3 - Article 386 of Law No: 6762 and its title has been amended to read as follows:

2. Announcement and notification:

Article 386 – In case the shareholders meeting has to be summoned so as to amend the articles of association; the amended text has to be announced along with the original text and the concerned persons have to be notified in accordance with Article 368.

ARTICLE 4 - First paragraph of Article 510 of Law No: 6762 has been amended as below and the third paragraph of the same article has been repealed:

Managers will apply for registration at the trade registry office functioning at the location of the company headquarters, in accordance with the provisions of Article 31.

ARTICLE 5 - First paragraph of Article 509 and Article 514 (totally) of Law No: 6762 has been repealed.

ARTICLE 6 – Subparagraph 1 of first paragraph of Article 168 of Procedural Tax Law No: 213 dated 04/01/1961 has been amended to read as:

1. Notification of initiation of operation for real persons will be served within ten days following the date of initiation of operation by themselves or by attorneys who are licensed in accordance with Attorneys Law No: 1136 or by members of professions authorized in accordance with Law No: 3568 to the related tax office. Notification of initiation of operation of companies will be served to the related tax office within ten days following the date of initiation of operation by commercial registrars. Notifications of companies including notifications for abandoning business or notifications of changes, except notification of initiation of operation will be served to the related tax office by the taxpayer within one month following the occurrence of the event being notified.

ARTICLE 7 - The paragraph below has been supplemented to Article 223 of Law No: 213, to read as:

At the establishment stage of joint stock companies and limited liability companies, the company books will be endorsed by the commercial registrar functioning at the location of the company headquarters or a notary.

ARTICLE 8 - First sentence of first paragraph of Article 224 of Law No: 213 has been amended to read as:

Certification annotations to be made by commercial registrars at the establishment stage of joint stock companies and limited liability companies and certification annotations to be made by notaries will be inscribed on the first page of the books and will contain the following information.

ARTICLE 9 - Paragraph (a) of Article 22 of the Stamp Duty Law No: 488 dated 01/07/1964 has been amended to read as:

a) Within three months following the registration of the articles of association of joint stock companies, partnerships limited by shares and limited liability companies or the resolutions regarding the extension of periods of such,

ARTICLE 10 - The following paragraph has been supplemented, to succeed the second paragraph into Article 3 of Labor Law No: 4857 dated 22/05/2003 to read as:

However, registration of companies shall be made as based on the documents sent by the trade registry offices, and these documents will be sent to the related regional directorate of Ministry of Labour and Social security by the related trade registry office in one month time.

ARTICLE 11 - The following paragraph has been supplemented to succeed the first paragraph of Article 8 of Social Security Law No: 506 dated 17/07/1964 to read as:

Notifications served by companies at company establishment stage, declaring the initiation date of employing insured personnel and the number of such to trade registry offices will be sent to the related department of the Authority by trade registry offices within ten days and this notification will be deemed as served to the Authority by the employer. In case the notification is not sent to the Authority in due time, the related trade registry office will be charged in accordance with Paragraph (a) of Article 140 of this Law.

ARTICLE 12 - The following paragraph has been supplemented to succeed the first paragraph of Article 153 of Law No: 213 to read as:

Trade registry offices will send one copy of the application documents of the establishments that are subject to corporate tax and apply for registration in compliance with Article 30 of Turkish Commercial Code, to the related tax office. Thus, obligation of the taxpayers to notify their initiation of operation is regarded as fulfilled. Procedural penalty provisions on late notification will be applied to trade registrars who do not fulfill their notification obligation on time.

ARTICLE 13 – This Law comes into effect on the date of its publication.

ARTICLE 14 – The provisions of this law will be enforced by the Council of Ministers.  

 

 

 

FDI Law 

FOREIGN DIRECT INVESTMENT 

ACT Law No. 4875                                                                        
Date of Endorsement : 5.6.2003 

Purpose and Scope 
Article 1 - 
The objective of this Act is to encourage foreign direct investments; to protect the rights of foreign investors; to define investment and investor in line with international standards; to transform the current screening and approval system into a notification based system for foreign direct investments; and thus regulate the principles to increase foreign direct investments through established policies. This Act comprises the treatments to be applied to foreign direct investments. 

Definitions
Article 2 - 
The terms used in this act shall have the following meanings: 
a) Foreign Investor:

1) Real persons residing abroad possessing foreign nationality and Turkish citizens residing abroad, and 
2) Foreign legal entities established under the laws of foreign countries and international institutions, that effect foreign direct investments in Turkey, 
b) Foreign Direct Investment: 
- Capital in cash in the form of convertible currency purchased and sold by the Central Bank of Turkey, 
- Stocks and bonds (other than Treasury bonds) and other forms of capital in kind participation in the companies, 
- Machinery and equipment, 
- Industrial and intellectual properties, that are acquired from abroad, or; 
i) Establishment of a new company or a branch office, 
ii) Participation in an already existing company either by acquisition of shares except through stock exchanges or by acquisitions of minimum 10% of shares or an equal proportion of voting rights through stock exchanges, by means of; 
- Reinvested earnings, financial claims, or any other investment related rights of financial value; and 
- Commercial rights for to the exploration and extraction of natural resources, that are acquired in Turkey, by foreign investors. 
c) Undersecretariat: The Undersecretariat of Treasury.

Principles of Foreign Direct Investments 
Article 3 – 

a) Freedom to invest and national treatment: 
Unless there are no international agreements or special legal provisions to the contrary; 
1- International investors are free to make direct investments in Turkey, 
2- International and Turkish investors are subject to equal treatment. 
b) Expropriation and Nationalization; 
Foreign direct investments, in accordance with current legislation, may not be expropriated or nationalized except for a public propose upon prompt, adequate as well as effective compensation. 
c) Transfers; 
Foreign investors may freely transfer profits, dividends, proceeds from the sale or liquidation of all or any part of an investment, proceeds derives from their commercial activities as well as payments under licence, management agreement, technical assistance agreements and repayments of foreign credit principal and interest through banks and private finance institutions. 
d) Acquisition of an immovable; 
Foreign investors may freely acquire of an immovable or have limited rights in rem through a legal entity incorporated under Turkish Law, that foreign investors may only acquire of an immovable where Turkish citizens have right to acquire of an immovable. 
e) Settlement of disputes; 
For settlement of disputes arising from investment agreements subject to private law and disputes arising from exclusive public service provisions and concession agreements made between foreign investors and the Turkish State, in addition to authorized local courts, the parties are entitled to apply to national or international arbitration or other means of dispute settlement channels, provided that the conditions in the related regulations are fulfilled and the parties agree thereon. 
f) Assessment of the value of capital in kind; 
The capital in kind is valued within the regulations of Turkish Commercial Law. However, the shares of companies residing abroad will be accepted as foreign capital share of foreign legal entities and the values determined by the courts of the home country, or other relevant authorities in the home country, or any other international credit rating agency’s valuations will be accepted while adding to Turkish company as capital in kind. 
g) Employment of foreign personnel; 
Working permits for foreign personnel to be employed in companies, branch offices and organizations to be established within the scope of this Law will be granted by the Ministry of Labour and Social Security.

Other principles and procedures of particular feature that will specify which foreign investor companies and organizations are deemed to be within the scope of this application and the definitions of key foreign personnel to be employed and their working permits will be regularized by a directive to be jointly prepared by Undersecretariat of the Treasury and the Ministry of Labour and Social Security in accordance with the provisions of Article 23 of Law 4817 dated 27 February 2003 on Working Permits for Foreign Personnel.

Provisions stipulated in Article 14, paragraph 1, sub-paragraph (b) of Law 4817 will not be applicable to foreign personnel to be employed within this framework. The conditions under which the provisions stipulated in paragraph 1 of Article 13 of Law 4817 will be applied to key foreign personnel employed, will be specified in the directive to be prepared. 
h) Liaison offices; 
The Undersecretariat may grant permission to foreign legal entities in order to open a liaison office in Turkey provided that they shall not engage in any other commercial activities.

Determination of policies and information requests 
Article 4 -
Taking into account the development plans, annual programs, general economic status of the country, trends in international investments and the opinions of related public institutions and private sector professional organizations; the Undersecretariat is authorized to establish the general framework of policies relating to foreign direct investment, by taking into account general economic conditions, annual welfare programs, and its aims as well as tendencies occuring globally in international foreign direct investment. The consent of the Undersecretariat is necessary for any amendments to be made in the laws and regulations in force concerning foreign direct investments and for any legislative drafts thereto.

The Undersecretariat, aiming at establishing and developing an information system on foreign direct investments, is authorized to request statistical data related to investments from all public establishments and authorities and professional organizations of the private sector. 
Foreign investors will submit the statistical data concerning their investments to the Undersecretariat, in accordance with the procedures and principles stipulated in the Directive to be prepared by the Undersecretariat. The subject data, except for statistical purposes cannot be used as any means of proof. 

Miscellaneous Provisions
Article 5 – 
a) Existing with foreign investor companies; 
All companies established pursuant to the Law No: 6224 dated 18 Jan. 1954 shall be subject to this Law, reserving their granted rights. 
b) Directive; 
The application procedures of this Law will be regulated by a Directive to be prepared by the Undersecretariat within one month following the publication of this Law.
c) Repealed Provisions; Law for the Encouragement of Foreign Capital with No: 6224 dated 18 Jan. 1954 is repealed. Any references made to Law No: 6224 in the laws and regulations are considered as made to this Law. 
d) "Amendmends on the provisions of this Law are to be regularized only by adding provisions to this Law or by affecting revisions thereto".

Provisional Article 1 – The provisions of the decrees, communiqués and circulars, in effect, which are in conformity with this Law, shall remain to be in force until new regulations to regularize the implementation of this Law take effect. 

Effectivity 
Article 6 – 
This Law shall come into force on the date of its publication.

Enforcement 
Article 7 –
 The provisions of this Law will be enforced by the Council of Ministers

 

 
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