Communique concerning the
Foreign Capital Framework Decree - Part II
Source: Official Gazette - Aug 24th, 1995 Official Gazette Date:
August 24, 1995, as amended by communique No. 3 published in the Official
Gazette dated June 27, 1996, No: 95/2 The purpose of this Communique is to
explain the principles concerning the application for and implementation of
permits to be granted according to the Foreign Capital Framework Decree
which is annexed to the Decree dated June 7, 1995 - No:95/6990.
Indirect
Participations Capital
Increase License,
Know-How, Tech.Assistance, Management & Franchising Transfer of Profits,
Dividends and Capital Shares
Payment of Foreign Partner Capital Share
Indirect
Participations Article
5- Enterprises with foreign capital, operating in Turkey, may participate
in existing companies or to be established, provided that they are granted
the necessary permits. Application for the permits shall be made to GDFI,
UT, together with the previous year's balance sheet and profit/loss table ,
Trade Registry Gazette of Turkey in which the final version of the Articles
of Association was published, capacity report and copy of the incentive
certificate of the company, if any. In case there is an alteration in
capital participation ratios of the company to be participated, the
information will be submitted to GDFI, UT within a month after the date of
alteration in capital share amounts (Excluding the exemptions regulated in
Article 14).
Capital
Increase Article
6- In case the existing foreign capital companies wish to increase their
capital; a) If the participation ratios of the foreign partner is not
changed, application shall directly be made to the Ministry of Industry and
Trade without a need for further permission from GDFI, UT. Within one month
following the realisation of capital increase these companies shall apply
to the GDFI, UT, together with Trade Registry Gazette of Turkey in which
the capital increase was published and the documents specified in Article
11 of this Communique for registering their capital increase. The Ministry
of Industry and Trade shall notify the Undersecretariat of Treasury
following the permission of capital increase. b) If there will be a change
in foreign partner's participation ratio, following the capital increase,
foreign capital companies shall apply to the GDFI, UT with the following
documents for obtaining permission . 1. Trade Registry Gazette of Turkey in
which the final version of capital increase was published, 2. Detailed
information about sources which will meet the capital increase, 3. Decision
of the Board of Directors of the company., 4. Other information and
documents if it deems necessary which may be required by the GDFI. At the
capital increase of enterprises with foreign capital, increased capital is
paid in the amounts and within duration specified in the Turkish Commercial
Code. Existing foreign capital companies are free to use advance capital
from their local or foreign partners for their future capital increases.
The advance capital brought from abroad by foreign partner may be kept in
the foreign exchange deposits account to be opened in the name of the
company and may be used without prior authorisation Foreign exchange rate
on the date when the foreign exchange deposits account was opened will be
applicable during the conversion of these foreign currencies into
corporation capital in the future. Capital advances must be registered as
capital within a year starting from date of credit to the foreign exchange
account. Advances returned to the foreign partner due to the cancellation
of capital increase, or for any other reason, or that are not registered as
capital within a year will be considered as a foreign loan starting from
the date of credit to the foreign exchange account and will be treated
within the general framework of the relevant legislation. Top
License,
Know-How, Technical Assistance, Management and Franchising Agreements Article 7- Public and private sector enterprises
shall apply to the GDFI, UT with the following documents for the
registration of license know-how, technical assistance, management and
franchising agreements to be made with persons and legal entities residing
abroad: The Agreement shall be certified either by the Turkish Consulate or
according to the provisions of the Convention on Abolishing the Requirement
of Legalisation for Foreign Official Documents Approval Obligation prepared
on the basis of the Hague Conference on Private International Law. 1. Three
copies of the original Agreement signed by the parties and the Turkish
version certified by notary public, 2. Documents verifying the existence of
the plants where the goods and services stated in the Agreement shall be
produced and, documentation of verification if the patent of the product in
question is registered. License, know-how, technical assistance, management
and franchising agreements to be signed between the Turkish public and
private sector enterprises and persons or legal entities resident abroad
shall become effective only after the registration of these agreements by
GDFI, UT. Payments arising from the implementation of these agreements
shall be transferred abroad through banks on the basis of terms of the
Agreement registered by GDFI., UT. Top
Transfer
of Profits, Dividends and Capital Shares Article 8- Following the deduction of the taxes
in accordance with the current tax laws, from the profits and dividends
corresponding to the shares of foreign shareholders of foreign capital
entities, the net amount will be transferred abroad on condition that the
concerned parties submit to banks three copies of the documents specified
below for the period in question. Following the transfer, Banks shall
submit a copy each from these documents together with a copy of the foreign
exchange sales receipt on the amount transferred to the Central Bank of
Turkey and GDFI, UT. 1. Tax statement , balance sheet and profit/loss table
approved by the relevant tax office, 2. Tax assessment and/or collection
receipts, 3. Profit distribution table. However, following the ending of the
previous fiscal year, branches and limited and joint-stock companies, which
resolved distribution of profits as stipulated at their annual ordinary
general assembly or shareholders meeting held in accordance with the
Turkish Commercial Code, may actualise transfer of profits provided that
among the above mentioned documents tax assessment and/or collection
receipts will be submitted later on. to the related bank. Article 9- In the
case that shares of foreign shareholder of enterprises with foreign capital
are either partially or wholly sold to the persons and legal entities
resident in Turkey, the amounts received or liquidised in case of
liquidation, will be transferred through banks concerned, provided that the
permission for sale or liquidation is obtained from GDFI , UT. Top
Payment
of Foreign Partner Capital Share Article 10- Each real person or legal entity
resident abroad should bring in a minimum of 50.000.-US Dollars to establish
corporations, become partners in existing companies or establish branch
offices. If the number of the foreign shareholders is exceeding one, the
minimum amount of foreign capital is calculated by multiplying 50.000.-US
Dollars by the number of foreign shareholders. Participation ratios of
foreign shareholders in the minimum amount can be freely determined.
Furthermore, in determining the company's capital and participation
amounts, it is an obligation to confirm with the minimum capital and participation
amounts specified in the Turkish Commercial Code. Real persons and legal
entities resident abroad pay their capital shares in the following manner
on the basis of the permission of GDFI, UT. Top
