Foreign Capital Framework
Decree
Source: Undersecretariat
of Treasury; Official Gazette - Jul 23rd, 1995 - No:
22352 Law No: 6990; Approved: 7 June 1995; Issued: 23 July 1995
Objective Definitions General Principles
Foreign Personnel Employment Transfers Blockage of Foreign
Partners' Capital Share Equality Principle
Authorised Agency Other Principles
Objective Article 1- The purpose of this Decree is to
establish the principles of promoting foreign capital which will flow into
Turkey within the framework of the Foreign Capital Encouragement Law (No:
6224), the protection of the Value of the Turkish Currency Law (No: 1567)
and the Law concerning the Organisation and Functions of Undersecretariat
of Treasury and Undersecretariat of Foreign Trade. (No: 4059)
Definitions Article 2- In the implementation of this Decree,
the terms used have the following meanings: a) Undersecretariat:
Undersecretariat of Treasury b) Real and legal persons resident abroad:
Real persons who are citizens of foreign countries and legal persons that
are formed in these countries. c) Foreign capital: Capital in cash in the
form of convertible or effective foreign currency bought and sold by
Central Bank of Turkey. The assets defined in Article 5 of this Decree.
Machinery, equipment, tools and similar goods, machinery parts, materials
and other necessary goods approved by Undersecretariat. Assets and
receivable of foreign nationals under Foreign Exchange Legislation if these
are accepted as share in capital by Undersecretariat. Intellectual property
such as patent rights and trade marks if accepted by Undersecretariat. Top
General Principles Article 3- Permissions concerning foreign capital
are issued in accordance with the following principles. a) The applications
of real and legal persons resident abroad about investing in Turkey, engaging
in commercial activities, participating in partnerships, opening branch
offices and establishing liaison offices are examined within the
Legislation in effect by Undersecretariat. b) Undersecretariat is empowered
to make amendments relating to issuance of permits for new investments and
participation, capacity increase, liquidation and mergers, alterations in
participation ratio for existing firms with foreign capital and also to
make amendments on duration, quantity, export undertaking, field of activity,
value and proportion of share. c) Real and legal persons resident abroad
must bring a minimum 50.000.- USA Dollars per person to establish
corporations, become partners in existing companies and opening branch
offices. In the case of that the number of foreign shareholders is above
one, the participation amounts of foreign partners in total capital can be
arranged freely. d) Capital increase can be done without taking any
permission if the participation ratios of foreign partners do not change.
After making capital increase, the application is done to Undersecretariat
for only registration. e) Real and legal persons resident abroad can buy or
sell the shares of existing companies in Turkey in accordance with the
principles defined by Undersecretariat. f) Undersecretariat can endorse a
transfer guarantee on shares or temporary receipts which are registered in
the name of foreign partners. g) License, know-how, technical assistance
and management agreements concluded by Turkish public and private sector enterprises
with real and/or legal persons resident abroad shall put into effect after
registering these agreements to Undersecretariat. h) Establishments with
foreign capital can assure every type of foreign credits freely. Top
Foreign Personnel Employment Article 4- The applications of private sector
establishments about employing foreign personnel are evaluated within the
Legislation Framework in effect and the principles defined by
Undersecretariat.
Transfers Article 5- The transfer or reinvestment of
profits, dividends, proceeds of sale and liquidation, compensation
payments, payments under license, technical assistance agreements,
repayments of foreign credit principal and interest, corresponding to the
shares in foreign capital, within the framework of this Decree, is
unrestricted. Transfers are realised through banks over the official
exchange rate valid in the date of the transaction.
Blockage of Foreign Partners' Capital Share in
Foreign Exchange Deposits Account Article 6- If demanded, it is not necessary to
convert the foreign currency to Turkish Lira . In other words, the foreign
exchanges (including effective ones) brought from abroad for the purpose of
establishing corporations, increasing capital or buying the shares of
existing Turkish companies can be blocked in Foreign Exchange Deposits
Account opened on the behalf of the firm or the partner who sell his/her
shares freely and can be considered as foreign partner capital share
amount. However, when equivalent TL amount of foreign currency is
registered as corporation capital, official foreign exchange bid rate in
the date of the Letter of Blockage is used. Top
Equality Principle Article 7- With taking the permissions within the
scope of Law No: 6224, the firms and branch offices established according
to Turkish Commercial Code and registered to Turkish Trade Registry are
considered as Turkish firms and branch offices. Top
Authorised Agency Article 8- Promotion relating with bringing
foreign capital into Turkey, permission, registration, granting the
incentives to investors, cancelling the permission certificates and
registrations, within the framework of this Decree, are executed by General
Directorate of Foreign Investment. Moreover, General Directorate of Foreign
Investment organise and coordinate the Build-Operate-Transfer model to
realise some or all of the investment and services which require high
technology and/or financial resources through local and/or foreign
establishments. Top
Other Principles Article 9- In the case of that the permissions
are cancelled by Undersecretariat, the information is given to Ministry of
Industry and Trade to make transaction according to Article 274 of Turkish
Commercial Code. Article 10- 1 % of the previous year total subsidy amount
of the Investments and Foreign Currency Earning Services Fund established
according to the Law No: 2976 dated on Feb. 2, 1984 and to the Decree No:
88/13458 dated on Nov. 8, 1988 can be used for financing the promotion
expenditures (including furniture purchases) of General Directorate of
Foreign Investment and General Directorate of Incentive Implementation.
Article 11- Paragraph 'f' in Article 15 of the Law concerning the
Protection of the Value of the Turkish Currency (No: 89/14391 dated on
August 7, 1989) is repealed. Article 12- Undersecretariat, if seen
necessary, can request the information and documents from the
establishments in Turkey about their activities. Article 13- The procedures
and principles concerning the implementation of this Decree are determined
by Communiques of Prime Ministry. Temporary Clause 1- In implementation of
Article 10 of this Decree, the total subsidy amount of 1994 in the Investments
and Foreign Currency Earning Services Fund is considered for 1995. Top
