Corporate Governance Requirements in Turkey: A Complete Guide for Foreign Investors

Establishing a company in Turkey is only the first step. To operate successfully and maintain compliance, foreign investors must understand and adhere to Turkey’s corporate governance framework. This comprehensive guide covers everything you need to know about managing your Turkish company within the legal requirements.

Overview of Corporate Governance in Turkey

Turkey’s corporate governance framework is primarily governed by the Turkish Commercial Code (TCC) No. 6102, which came into effect in 2012 and has been subsequently amended. The code aligns Turkish corporate law with EU standards and introduces modern governance principles.

For publicly traded companies, the Capital Markets Board (CMB) issues additional Corporate Governance Principles that complement the TCC requirements.

Company Management Structures

Limited Liability Companies (LLC - Limited Şirket)

LLCs have a simpler governance structure:

Manager(s) - Müdür(ler)

At least one manager must be appointed
Managers can be shareholders or third parties
No nationality or residency requirements for managers
At least one manager must have signing authority
Managers are appointed by the shareholders’ assembly

Key Manager Responsibilities:

Day-to-day management of the company
Representing the company before third parties
Maintaining corporate books and records
Ensuring legal compliance
Preparing financial statements

Joint Stock Companies (JSC - Anonim Şirket)

JSCs have a more complex governance structure with distinct bodies:

Board of Directors - Yönetim Kurulu

Minimum one board member required
Board members can be legal entities (represented by a natural person)
At least one board member must be a Turkish resident (for practical purposes)
Board members are elected by the General Assembly
Term of office: Maximum 3 years, re-election permitted

General Assembly - Genel Kurul

Composed of all shareholders
Supreme decision-making body
Must meet at least once annually (Ordinary General Assembly)
Extraordinary meetings can be called when needed

Board of Directors: Structure and Duties

Composition Requirements

The TCC provides flexibility in board composition:

Single-member boards: Allowed for smaller JSCs
Multi-member boards: Required for larger or publicly traded companies
Independent board members: Mandatory for publicly traded companies under CMB regulations

Board Member Qualifications

Board members must:

Be natural persons or legal entities
Have legal capacity
Not be bankrupt or under guardianship
Not have been convicted of certain crimes

Key Board Duties and Responsibilities

1. Management and Representation

Strategic direction of the company
Appointing and supervising executive management
Representing the company in legal matters

2. Non-Delegable Duties (TCC Article 375)

Certain duties cannot be delegated to committees or executives:

Overall management and supervision
Determining company organization
Establishing financial planning and accounting systems
Appointing and dismissing managers
Supervising managers’ compliance with laws and policies
Preparing annual reports and general assembly meetings
Notifying courts in case of over-indebtedness or capital loss

3. Duty of Care and Loyalty

Act with the diligence of a prudent manager
Prioritize company interests over personal interests
Maintain confidentiality of company information
Avoid conflicts of interest

Board Meetings

Meeting Requirements:

No minimum meeting frequency specified by law
Meetings can be held physically or electronically
Quorum: Majority of board members (unless articles specify higher)
Decisions: Majority of attending members

Documentation:

Minutes must be kept for all meetings
Minutes should include: date, attendees, agenda, discussions, and resolutions
Minutes must be signed by attending members or chairman and secretary

General Assembly: Rights and Procedures

Types of General Assembly Meetings

1. Ordinary General Assembly (Olağan Genel Kurul)

Must be held within 3 months of fiscal year-end
Mandatory agenda items:
- Approval of financial statements
- Discharge of board members
- Appointment/re-election of board members
- Appointment of auditors
- Profit distribution decisions

2. Extraordinary General Assembly (Olağanüstü Genel Kurul)

Called when urgent matters require shareholder approval
Typical matters: capital increases, mergers, amendments to articles

Calling a General Assembly

Who Can Call:

Board of Directors (primary authority)
Shareholders holding at least 10% of share capital (for JSCs)
Shareholders holding at least 10% of shares (for LLCs)
Court order (if board fails to call when required)

Notice Requirements:

Minimum 2 weeks advance notice
Notice must include: date, time, venue, and agenda
Electronic notification permitted if shareholder consents
Registered letters required for registered share companies

Quorum and Voting

Ordinary Matters:

Quorum: At least 25% of share capital represented
Decision: Simple majority of votes cast

Important Matters (qualified majority required):

Quorum: At least 50% of share capital
Decision: Majority of votes cast
Applies to: amendments to articles, capital changes, mergers

Very Important Matters:

Higher quorums specified in articles or law
Applies to: changing company purpose, limiting share transferability

Shareholder Rights

Information Rights:

Access to financial statements and reports
Right to ask questions at general assembly
Right to examine company books (in certain circumstances)

Participation Rights:

Attend general assembly meetings
Speak and make proposals
Vote on agenda items

Financial Rights:

Receive dividends
Receive liquidation proceeds
Subscribe to new shares (pre-emption rights)

Control Rights:

Sue board members for damages
Request special audit
Challenge general assembly resolutions

Auditing Requirements

Independent Audit Obligations

Companies meeting certain thresholds must undergo independent audit:

Mandatory Independent Audit Criteria (any two of three):

Total assets: TRY 150 million or above
Net revenue: TRY 300 million or above
Average employees: 150 or more

Sector-Specific Requirements:

Banks and financial institutions: Always required
Insurance companies: Always required
Capital market institutions: Always required

Auditor Selection and Role

Selection:

Auditors appointed by General Assembly
Must be registered with the Public Oversight Authority (KGK)
Must be independent from the company

Scope:

Audit of annual financial statements
Verification of annual report
Assessment of internal control systems

Reporting:

Audit report submitted to General Assembly
Report filed with Trade Registry

Internal Control Systems

While not mandatory for all companies, establishing internal control systems is recommended:

Financial reporting controls
Compliance monitoring
Risk management procedures
Internal audit functions (for larger companies)

Corporate Books and Records

Mandatory Books

For All Companies:

Journal (Yevmiye Defteri)
Ledger (Defteri Kebir)
Inventory Book (Envanter Defteri)
Share Register (Pay Defteri)
Board of Directors’ Resolutions Book
General Assembly Minutes Book

Record-Keeping Requirements

Books must be maintained in Turkish
Records must be kept for 10 years
Electronic record-keeping permitted with proper safeguards
Books must be certified by notary or Trade Registry

Annual Compliance Calendar

Q1 (January - March)

Deadline	Obligation
January 31	E-ledger submission for previous month
February 25	Monthly VAT return
March 31	Ordinary General Assembly meeting

Q2 (April - June)

Deadline	Obligation
April 30	Corporate tax return and payment
April 30	Annual report preparation
By end of Q2	Trade Registry notifications (if any changes)

Q3-Q4 (July - December)

Deadline	Obligation
Ongoing	Quarterly withholding tax returns
December 31	Fiscal year-end preparations
Ongoing	Board meetings as needed

Corporate Governance Best Practices

For Foreign-Owned Companies

Clear Reporting Lines: Establish clear communication between Turkish subsidiary and parent company
Local Expertise: Engage local legal and financial advisors familiar with Turkish regulations
Documentation: Maintain thorough records of all corporate decisions in both Turkish and English
Compliance Calendar: Implement a compliance calendar to track deadlines
Regular Board Meetings: Hold regular board meetings to ensure proper oversight
Internal Policies: Develop written policies for:
- Related-party transactions
- Conflict of interest
- Anti-corruption compliance
- Data protection (KVKK)

Governance Frameworks

Consider implementing recognized governance frameworks:

OECD Principles of Corporate Governance
IFC Corporate Governance Methodology
CMB Corporate Governance Principles (for public companies)

Penalties for Non-Compliance

Administrative Penalties

Failure to hold General Assembly: Warning, then fines
Failure to submit required filings: Administrative fines
Improper record-keeping: Tax penalties and audit adjustments

Civil Liability

Board members may be personally liable for:

Breach of duty of care
Acting beyond authority
Causing damage to company or shareholders

Criminal Liability

Serious violations can result in criminal charges:

Fraudulent financial reporting
Misappropriation of company assets
Tax evasion

How FDI Consultancy Can Help

Navigating Turkey’s corporate governance requirements can be complex for foreign investors. FDI Consultancy offers comprehensive support:

Corporate Secretarial Services:

Board meeting organization and minute-taking
General assembly preparation and execution
Trade Registry filings and notifications
Corporate document management

Compliance Support:

Annual compliance calendar management
Regulatory deadline tracking
Document preparation and filing

Governance Advisory:

Board structure optimization
Policy development
Best practice implementation
Training for management teams

Ongoing Support:

Monthly/quarterly compliance checks
Regulatory updates and briefings
Liaison with authorities

Conclusion

Effective corporate governance is fundamental to operating successfully in Turkey. Foreign investors who understand and implement proper governance structures not only ensure compliance but also build more resilient and trustworthy businesses.

The Turkish Commercial Code provides a modern and flexible framework, but it requires careful attention to detail and consistent compliance efforts. By establishing robust governance practices from the start, foreign investors can focus on growing their business with confidence.

Need help with corporate governance compliance in Turkey? Contact FDI Consultancy for expert guidance tailored to your company’s needs. Our team of experienced professionals can help you establish and maintain best-practice governance structures while ensuring full compliance with Turkish regulations.