Business Formation and Company Law for Arab Investors in Turkey

Türkiye is an important destination for Arab entrepreneurs and investors who want to establish companies, expand their businesses, enter the Turkish market, or develop commercial relationships with Turkish and international companies.

Istanbul is particularly important for Arab investors because of its strategic location, international connections, financial infrastructure, and access to regional and global markets.

However, establishing a company in Türkiye involves more than registering a business. Arab investors should consider company structure, shareholders, capital, management, contracts, tax obligations, employment, banking, commercial disputes, and regulatory requirements.

Can Arab Citizens Establish a Company in Türkiye?

Foreign nationals can establish companies in Türkiye subject to the applicable legal requirements.

An Arab investor may establish or participate in a Turkish company depending on the business activity and applicable regulations.

Common company structures include:

• Limited liability companies.
• Joint-stock companies.
• Other legally recognized structures.

The appropriate structure depends on the investor's business model and objectives.

Can a Foreign Investor Own 100% of a Turkish Company?

Depending on the sector and applicable regulations, foreign investors may be able to establish and own a Turkish company without a Turkish shareholder.

However, certain regulated sectors may have specific restrictions or licensing requirements.

Before establishing a company, an Arab investor should verify whether the intended business activity is subject to special rules.

What Documents Are Needed to Establish a Company?

The required documents can vary depending on the company structure and the shareholders.

They may include:

• Passport.
• Tax identification information.
• Company articles.
• Shareholder information.
• Registered address.
• Signature documents.
• Power of attorney, where applicable.
• Other corporate documents.

Foreign documents may require apostille, legalization, translation, or notarization.

Can an Arab Investor Establish a Company Without Coming to Türkiye?

Depending on the procedure, an Arab investor may authorize a lawyer or representative to handle certain company formation procedures.

A properly prepared power of attorney can allow a representative to carry out specified actions.

This can be particularly useful for investors living in:

• Saudi Arabia.
• United Arab Emirates.
• Qatar.
• Kuwait.
• Bahrain.
• Oman.
• Jordan.
• Egypt.
• Other countries.

Can a Lawyer Establish a Turkish Company on Behalf of an Arab Investor?

Depending on the circumstances, a Turkish lawyer can assist with the legal aspects of company formation under a valid power of attorney.

The scope of representation should be clearly defined.

Legal assistance may include:

• Preparing corporate documents.
• Coordinating registration procedures.
• Reviewing shareholder arrangements.
• Preparing powers of attorney.
• Reviewing commercial contracts.
• Assisting with corporate compliance.

What Is the Difference Between a Limited Company and a Joint-Stock Company?

The appropriate company structure depends on the investor's goals.

A limited liability company can be suitable for certain small and medium-sized businesses.

A joint-stock company may be appropriate for businesses seeking a different corporate structure, investment model, or future financing opportunities.

The choice should be made after considering:

• Number of shareholders.
• Capital.
• Business activity.
• Investment plans.
• Management structure.
• Future share transfers.

Can Arab Investors Become Company Directors?

Foreign nationals may serve in management positions in Turkish companies subject to applicable legal requirements.

The company's articles and applicable legislation should be reviewed to determine the appropriate management structure.

What If There Are Multiple Arab Shareholders?

Several Arab investors may establish a company together.

In such cases, it is important to establish clear rules concerning:

• Ownership percentages.
• Capital contributions.
• Management.
• Voting.
• Profit distribution.
• Share transfers.
• Exit mechanisms.

A shareholder agreement can be useful for addressing these matters.

What Is a Shareholders' Agreement?

A shareholders' agreement is a contractual arrangement between shareholders concerning their rights and obligations.

It may address:

• Voting rights.
• Management.
• Transfer restrictions.
• Deadlock.
• Dividend policy.
• Exit rights.
• Dispute resolution.
• Confidentiality.

For international investors, clear contractual arrangements can help prevent future disputes.

What If an Arab Investor Wants to Buy an Existing Turkish Company?

An Arab investor may choose to acquire an existing Turkish company instead of establishing a new company.

Before acquiring a company, the investor should conduct legal and financial due diligence.

This may include reviewing:

• Corporate records.
• Share ownership.
• Contracts.
• Debts.
• Litigation.
• Tax matters.
• Employees.
• Licenses.
• Assets.
• Liabilities.

What Is Legal Due Diligence?

Legal due diligence involves examining the legal status and potential risks of a company or transaction.

For an Arab investor, due diligence may identify:

• Undisclosed liabilities.
• Litigation.
• Contractual restrictions.
• Ownership problems.
• Regulatory issues.
• Employment disputes.
• Tax-related risks.

It is generally advisable to complete due diligence before signing a major acquisition agreement.

What If the Turkish Company Has Debts?

An investor acquiring an existing company should determine the company's outstanding obligations.

These may include:

• Bank loans.
• Supplier debts.
• Tax debts.
• Employee claims.
• Litigation-related liabilities.
• Contractual obligations.

The transaction structure should take these risks into account.

What If the Company Has a Tax Dispute?

A Turkish company may have an ongoing tax audit, assessment, or dispute.

An Arab investor considering an acquisition should determine:

• Whether there is a tax audit.
• Whether tax penalties exist.
• Whether tax litigation is pending.
• Whether there are unpaid tax liabilities.

These matters can materially affect the transaction.

Can Arab Investors Open a Bank Account for Their Turkish Company?

A Turkish company may need a bank account to conduct its business.

Banks may request corporate and identification documents as part of their account-opening and compliance procedures.

The exact requirements can vary depending on the bank and the circumstances.

Can an Arab Investor Transfer Capital From an Arab Country to Türkiye?

Investors may transfer funds to Türkiye for purposes such as:

• Company capital.
• Investment.
• Property acquisition.
• Loans.
• Business expenses.

The investor should maintain documentation establishing the source and purpose of significant transfers.

What If the Bank Requests Information About the Source of Funds?

Banks may request information and documentation concerning transactions and the source of funds.

An investor may need to provide:

• Bank records.
• Contracts.
• Company documents.
• Investment agreements.
• Financial records.
• Other supporting documents.

Proper documentation can help explain significant international transactions.

Can Arab Investors Sign Commercial Contracts in Türkiye?

Arab-owned Turkish companies may enter into commercial agreements with:

• Turkish companies.
• Arab companies.
• European companies.
• International businesses.
• Government-related entities, where permitted.

Contracts should clearly establish:

• Parties.
• Services or goods.
• Price.
• Payment terms.
• Delivery.
• Liability.
• Termination.
• Dispute resolution.

What If a Turkish Business Partner Breaches the Contract?

A commercial dispute can arise if a business partner:

• Fails to pay.
• Fails to deliver goods.
• Breaches confidentiality.
• Violates exclusivity.
• Terminates the contract improperly.

The first step is usually to review the contract and determine the available remedies.

Can an Arab Investor Sue a Turkish Company?

Depending on the dispute and applicable jurisdiction, an Arab investor may have legal remedies against a Turkish company or business partner.

Potential proceedings may involve:

• Commercial courts.
• Enforcement offices.
• Arbitration.
• Mediation.
• Other dispute-resolution mechanisms.

The appropriate procedure depends on the contract and the nature of the dispute.

Can a Turkish Company Sue an Arab Investor?

The same principles apply in reverse.

A Turkish company may pursue claims against an Arab investor if there is a contractual or other legal basis.

International parties should carefully review the jurisdiction and dispute-resolution provisions in their agreements.

What If the Contract Contains an Arbitration Clause?

Some international commercial agreements contain arbitration clauses.

An arbitration clause can establish:

• Arbitration institution.
• Seat of arbitration.
• Applicable rules.
• Number of arbitrators.
• Language.
• Governing law.

The clause should be reviewed before signing the agreement.

What If the Arab Investor Has a Dispute With a Business Partner?

Shareholder and business-partner disputes may concern:

• Ownership.
• Management.
• Profit distribution.
• Capital contributions.
• Share transfers.
• Company decisions.

A properly drafted shareholders' agreement can provide mechanisms for addressing such disputes.

What If the Arab Investor Wants to Sell Their Shares?

Share transfers can be subject to legal and contractual requirements.

The investor should review:

• Company articles.
• Shareholder agreement.
• Transfer restrictions.
• Existing pledges.
• Approval requirements.
• Registration procedures.

The legal process depends on the company structure and applicable rules.

What If One Shareholder Wants to Leave the Company?

An exit can be handled through different mechanisms depending on the corporate structure and agreements.

Possible arrangements may involve:

• Share sale.
• Buyout.
• Transfer to another shareholder.
• Corporate restructuring.
• Other contractual mechanisms.

The shareholders should establish a clear procedure where possible.

What If There Is a Deadlock Between Arab Shareholders?

A deadlock may arise when shareholders cannot agree on important corporate decisions.

A shareholders' agreement can provide mechanisms such as:

• Negotiation.
• Mediation.
• Buy-sell mechanisms.
• Appointment procedures.
• Arbitration.

The appropriate mechanism depends on the agreement and company structure.

Can Arab Investors Employ Foreign Workers in Türkiye?

A Turkish company may employ foreign nationals subject to the applicable work-permit and employment rules.

The employer should review:

• Work permits.
• Employment contracts.
• Social security.
• Payroll.
• Immigration status.

Employment and immigration compliance should be handled together.

Can an Arab Company Open a Branch or Liaison Office in Türkiye?

Foreign companies may consider different structures for entering the Turkish market, depending on their business goals.

These can include:

• Turkish subsidiary.
• Branch.
• Liaison office.

Each structure has different legal and operational consequences.

What Is a Liaison Office?

A liaison office can be used for certain representative or market-development activities, subject to applicable authorization and restrictions.

It is not necessarily equivalent to a fully operational Turkish commercial company.

The intended activities should be reviewed before choosing this structure.

What If the Arab Investor Wants to Import Goods?

Import and international trade activities can involve:

• Customs.
• Commercial contracts.
• Product regulations.
• Taxes.
• Documentation.
• Payment arrangements.

An Arab investor should review the regulatory requirements applicable to the specific products.

What If the Company Exports Goods From Türkiye?

Export transactions can involve:

• International sales contracts.
• Customs.
• Shipping.
• Insurance.
• Payment.
• Product compliance.

International contracts should clearly establish the rights and responsibilities of the parties.

What If an Arab Investor Purchases a Turkish Company Through a Holding Structure?

International investors may use corporate structures involving companies in different jurisdictions.

Such structures can raise questions concerning:

• Ownership.
• Tax.
• Beneficial ownership.
• Corporate governance.
• Financing.
• Regulatory compliance.

Specialist legal and tax advice may be appropriate before implementing a complex structure.

What If the Arab Investor Has an Entry Ban?

An Arab investor may have a Turkish company while being unable to enter Türkiye because of:

• Entry ban.
• Tahdit code.
• Previous deportation.
• Visa restriction.

In such circumstances, the immigration issue should be handled separately from the company's corporate affairs.

Can an Arab Investor Manage a Turkish Company From Abroad?

Depending on the corporate structure and management arrangements, some company matters can be handled remotely or through authorized representatives.

A lawyer or corporate representative may be able to handle certain procedures under a valid power of attorney.

However, specific corporate actions may require additional formalities.

What If the Arab Investor Is Stopped at Istanbul Airport?

An Arab investor arriving at Istanbul Airport may encounter an immigration or law-enforcement issue that prevents them from entering Türkiye.

This can create practical problems if the person needs to:

• Attend a shareholder meeting.
• Sign corporate documents.
• Manage company affairs.
• Meet business partners.
• Complete an investment transaction.

Legal representation may help with certain corporate procedures while the immigration issue is addressed.

What Documents Should Arab Investors Keep?

Important corporate documents can include:

• Articles of association.
• Share certificates or records.
• Shareholder agreements.
• Board decisions.
• Commercial contracts.
• Bank records.
• Tax documents.
• Employment agreements.
• Licenses.
• Invoices.
• Corporate correspondence.

Maintaining complete corporate records can be important in future disputes.

Cosmos Legal Law Firm Services for Arab Business Investors

Cosmos Legal Law Firm provides legal assistance to Arab entrepreneurs, investors, shareholders, and companies conducting business in Türkiye.

Depending on the circumstances, the firm's services may include:

• Company formation.
• Corporate structuring.
• Shareholder agreements.
• Corporate due diligence.
• Company acquisitions.
• Share transfers.
• Commercial contracts.
• Corporate disputes.
• Shareholder disputes.
• International commercial transactions.
• Employment-related legal matters.
• Regulatory compliance.
• Debt and enforcement matters.
• Commercial litigation.
• Arbitration.
• Investment-related legal assistance.
• Representation before Turkish authorities and courts.
• Immigration matters affecting foreign investors.

The firm can assist Arab investors from the initial company-formation stage through ongoing corporate operations and commercial disputes.

Why Is Legal Assistance Important for Arab Investors?

Establishing a company in Türkiye can involve several areas of law simultaneously.

An Arab investor may need to address:

• Corporate law.
• Tax.
• Employment.
• Immigration.
• Commercial contracts.
• Banking.
• Real estate.
• International trade.

A coordinated legal approach can help the investor understand these different obligations before making significant commitments.

Conclusion

Arab investors can establish and operate businesses in Türkiye subject to the applicable legal and regulatory requirements.

Before establishing or acquiring a company, investors should carefully consider corporate structure, shareholders, contracts, liabilities, tax obligations, employment, banking, licensing, and dispute-resolution mechanisms.

For Arab investors who travel through Istanbul Airport, an entry ban, Tahdit code, or other immigration restriction can also create practical difficulties in managing a Turkish company.

Cosmos Legal Law Firm assists Arab investors with company formation, corporate structuring, acquisitions, shareholder agreements, commercial contracts, corporate disputes, international transactions, and related immigration matters in Türkiye.

Each investment and corporate structure should be reviewed individually according to the investor's nationality, business activity, ownership structure, financing arrangements, and applicable Turkish law.