REAL ESTATE ACQUISITION OF FOREIGN CAPITAL COMPANIES (assumption: services of a lawyer used during process)
The expression of 'foreign capital companies' is usually confused with the expression of 'foreign company'. First of all, it should be stated that 'foreign capital companies' are established according to the provisions of the Turkish Trade Law in Turkey and enrolled in Turkish Trade Registry. In other words, these companies are subjected to the legal provisions of the Republic of Turkey. Only, the whole or part of their capital belongs to foreign real and legal persons. Availability of foreign shareholders within the company will not include it within the status of foreign legal personality; because nationality of the company and nationality of its shareholders are different matters.
The Law for Encouragement of Foreign Capital numbered 6224 and dated 18 January 1954 was repealed by Foreign Direct Investment Law numbered 4875 and dated 5 June 2003 that entered into effect being published in the Official Gazette numbered 25141 and dated 17 June 2003. New provisions were adopted to encourage and increase foreign direct investments, to protect rights of foreign investors, and to transform permission and ratification system to informative systems in realization of foreign investments.
With regard to the subject, a memo numbered 1363-100/841 and dated 7 August 2003 was announced to all our units through our regional directorates and it was stated that implementation would be carried out within the framework of the following statements:
By the Foreign Direct Investment Law numbered 4875, foreign investors are subjected to equal treatment with domestic investors; permissions and ratifications like investment permissions, company establishment permissions, were removed. Moreover, companies having legal personality that foreign investors participate in or establish in our country, are allowed to acquire real estate or limited real rights in areas where acquisition of these rights is allowed for Turkish Citizens.
Companies established according to the repealed Law numbered 6224 or that will act according to the Law numbered 4875 which regards the activities of foreign capital companies in our country, are considered as companies of the Republic of Turkey, according to the criteria of establishment place or administration center. For this reason, real estate acquisition and other demands concerning land register of foreign capital companies that either obtained activity permission according to the repealed Law for Encouragement of Foreign Capital or will act according to the Foreign Direct Investment Law numbered 4875, are concluded by relevant Land Registry Offices implementing the same methods and rules as for companies established according to the Turkish Trade Law, after examining authorization documents given by the Trade Register Authorities that indicate the competent person and competence for real estate acquisition of the company.
LEGAL PROCEDURE WHICH SHOULD BE FOLLOWED
As mentioned herein above we would like to firstly state that foreign investors are free to make foreign direct investments in Turkey and have equal rights with domestic investors according to the 4875 numbered Code of Foreign Direct Investors. In order to establish a trading company in Turkey it is needed to make an application to related Trade Register Office and submit the necessary documents.
Please kindly be informed that it would not be wrong to say the best way to establish a trading company for a real person is limited liability Company in Turkey. It needs at least 2 real persons in order to establish a limited liability company.
Please note that, once it is decided to establish a Limited Liability Company here in Turkey, there is a need of 2 Persons. The persons can be foreign and/or one of them can be Turkish. In practice the second person is found by the client and who is also foreign. In order to avoid any future problems the share structure of the company is constituted as 99.9 % percent is on the main person and 0.1% is on the founded person. Moreover, the director of the company also stays on main person.
Preparation of the Power of Attorney (POA).
Copy of the passports together with two photographs.
Once above mentioned documents are received, the procedure will start. During this period of time the application will be made for obtaining permissions, the application will be made to related ministry, the articles of association will be prepared, the application will be made to tax authority and preparation of the necessary company books will be completed.
It should be noted that, once the company is established it is necessary to also ascertain the legal address of the company which will be checked by the tax officers before giving final permission. Considering that it will be difficult for you to find a place for you to ascertain as a legal address of the company, usually lawyers undertake this task and appoint their addresses as such.
Please be informed that the opening procedure of the company may take a week.
Once the company is registered, the second POA on behalf the company should be prepared for the lawyers to comply with legal procedure before the Governor and Land Registry. At this stage, POA can be given only by your side as a representative of the company.
After completion of the procedure of the company and issuance of POA as per the Regulation numbered 27721 and dated 06.10.2010 your lawyer will apply to the Governor to get the permission for purchase of the real estate before the Land Registry. As per new regulation the governor asks to the related Military Service to also get their permission. Please note that under normal conditions, this procedure may take a week. However considering that the Governor has to wait for the permission of the Military Service this time can be about 15 days.
By having the permission from the Governor, the application will be made before the Land Registry together with the seller. Once the application is made, Land Registry office writes to the Municipality to ask for the current status of the real estate and related map of the same. At this stage the second permission will not be necessary from the Military Service.
On the other hand considering that there is reciprocity between Turkey and your country, in this case all necessary investigation will be completed and all other legal process, including but not limited with necessary investigation before the land registry, issuance of sale and purchase agreement, applications to the municipality and governor and obtaining military clearance, will be completed by your lawyer.
Costs of setting up foreign capital company and annual maintenance costs
One off set up costs amount to around GBP 1,500 and annual fees of maintaining the company are around GBP 1,000 including registry submission fees and accounting fees, etc.