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Turkey continues to attract foreign investors thanks to its strategic location, strong domestic market, and investor-friendly corporate framework. While the company registration process may appear straightforward, foreign entrepreneurs often face legal and procedural complications due to unfamiliarity with local regulations.
Understanding the most common legal mistakes can help investors avoid costly delays and compliance risks.
1. Choosing the Wrong Company Type
One of the most frequent mistakes is selecting a company structure without fully understanding its long-term implications.
In Turkey, the most commonly preferred entities are Limited Liability Companies (LLC) and Joint Stock Companies (JSC). Each structure differs in terms of:
- Minimum capital requirements
- Shareholder liability
- Corporate governance obligations
- Share transfer flexibility
- Audit requirements
Choosing the wrong structure at the outset may result in unnecessary restructuring, tax inefficiencies, or operational limitations.
2. Improper Drafting of the Articles of Association
The Articles of Association define the company’s operational scope, management structure, and internal governance rules.
Foreign investors often rely on template documents that fail to address sector-specific needs or shareholder dynamics. Inadequate drafting may later create disputes between partners or restrict business activities.
Proper legal structuring during the company establishment in Turkey phase ensures that the company’s foundation is legally secure and adaptable to future growth.
3. Ignoring Capital and Shareholding Compliance Rules
Although foreign investors may own 100% of a Turkish company, capital contribution procedures must strictly comply with Turkish Commercial Code requirements.
Common errors include:
- Incorrect capital deposit procedures
- Failure to document capital commitments properly
- Misunderstanding share transfer restrictions
Non-compliance at this stage may delay registration or trigger administrative complications.
4. Overlooking Tax and Social Security Obligations
After incorporation, companies must complete:
- Tax registration
- VAT registration (if applicable)
- Social security registration for employees
Foreign investors sometimes assume these steps are automatic, which may result in penalties or late compliance issues.
Early legal and tax planning is essential to prevent regulatory exposure.
5. Failing to Obtain Sector-Specific Licenses
Certain industries in Turkey — including finance, healthcare, education, energy, and regulated trade sectors — require additional approvals before commencing operations.
Starting commercial activities without required permits may result in fines, suspension, or operational shutdown.
6. Underestimating the Importance of Local Legal Representation
Foreign shareholders frequently attempt to manage the incorporation process remotely without proper legal representation. This may cause delays related to notarization, apostille procedures, power of attorney documentation, and registry filings.
Working with experienced corporate lawyers during the company formation process in Turkey significantly reduces procedural risks and ensures compliance with local regulations.
Conclusion
Establishing a company in Turkey is legally accessible to foreign investors; however, regulatory compliance, corporate structuring, and documentation requirements must be handled carefully from the outset.
Avoiding common legal mistakes not only prevents administrative delays but also protects long-term operational stability. Foreign entrepreneurs are strongly advised to obtain professional legal guidance to ensure a smooth and compliant incorporation process.
