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[null,"Prepared By:","Contributors:"]
[null,"Pekin Attorney Partnership"]
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[]
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["Social Enterprise Law Surveys"]
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["Report Generated: 5/2/2025"]
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["View your report results on next tab"]

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["Question","Turkey"]
["I. Enterprise Form"]
["What jurisdiction(s) do you practice in?","Turkey\n"]
["What are the most commonly used types of for-profit corporate organizational forms in your jurisdiction (e.g., corporation, limited liability company, benefit corporation, social purpose corporation, etc.) used by Enterprises operating a trade or business (rather than for investment or holding company purposes)? Please briefly describe these forms. a. Of these, which are the most common for-profit organizational forms used by Enterprises seeking financing from investors and that will have multiple owners? b. Other than organizational forms specifically designed for Social Enterprises (and discussed below under Question 4), which, if any, are the most common for-profit organizational forms used by Social Enterprises?"," The most common for-profit organizational forms utilized in Turkey are the joint stock companies (“JSC”) and the limited companies (“LC”). Both types are similar. You may find below a brief description evaluating the differences and common parts of such company types. \n\n \n\t Both JSCs and LCs can be established with one or more shareholders. However, an LC may not have more than fifty shareholders. \n\t The minimum required capital is TL 10,000 for an LC and TL 50,000 for a JSC. \n\t In JSCs and LCs, ¼ of the share capital shall be paid prior to the registration of the company and the remaining amount shall be paid within 24 months following the registration. \n\t A JSC is managed by its Board of Directors and an LC by a manager or a Board of Managers. Board of Directors members do not have to be shareholders of the JSC. However, at least one shareholder in an LC must be a manager. \n\t General Assembly meetings of JSC are subject to procedural requirements and depending on the subject of the company may be subject to the supervision and presence of a representative of the Ministry of Science, Industry and Trade. An LC is allowed to convene its General Assembly meeting through a written resolution if all shareholders concur. \n\t Shareholders of a JSC are liable only for the amount of the capital contributed by such shareholders. On the other hand, shareholders of an LC, unlike JSCs, may be liable for amounts owed by the company to government authorities for taxes, duties, levies and charges without any limitation in proportion to their capital contribution if the company is unable to make the required payments. \n\t Provisions regarding rights of first refusal, put and call options or other restrictions with respect to share acquisitions are not enumerated among the exhaustive list of issues that may be covered in the Articles of Association of a joint stock company. Thus, these types of provisions may not be allowed to be set forth in the Articles of Association. Unlike JSCs, Articles of Association of an LC can include provisions granting rights of first refusal, call options and redemption rights regarding shares to the shareholders of the company. \n\t JSC is specifically preferred where shareholders with potentially conflicting interests come together, such as in a joint venture.  In addition, a JSC is the only possible option where a public offering of securities is anticipated. Further, the JSC structure is by far more workable with respect to any type of restructuring.  LC is a rather simpler structure that takes the same amount of time to incorporate as a JSC, but may in the long run be easier to administer.  While JSC is by far the more common choice; the LC may be preferable when the primary objective is to establish a fully-owned subsidiary with minimum capital and administrative requirements. \n \n\n Besides the above organizational types, which are mostly preferred for investment, purposes due to their nature (i.e. minimum share capital requirement and priority of the shareholder value) cooperative companies (“CC”) are for-profit corporate organizational forms used by Enterprises operating a trade or business rather than for investment or holding company purposes. Under Turkish laws, it is possible to incorporate CCs where the workers are the owners of the CCs. CCs are required to be incorporated by at least 7 owners without any minimum capital requirement. In CCs, each owner has equal voting rights and directors representing the CC are required to be appointed amongst the owners of the CC. \n\n a. In an LC, the maximum number of shareholders is 50 and in principle, CCs are grounded on public and voluntary ownership. Thus, enterprises that seek financing from investors and will have multiple owners tend to form JSCs. \n\n b.There are no organizational forms specially designed for Social Enterprises in Turkey. Entities with social or environmental purposes are mostly incorporated under the form of an association or foundation, which are in nature not-for-profit organizational forms. However, CCs may be preferred to be incorporated for social and environmental purposes such as childcare cooperatives and women entrepreneurs’ cooperatives. \n"]
["Do any of your jurisdiction’s traditional organizational forms require or permit the board or managers to consider, balance or prioritize interests other than shareholder value in decision making? What other interests, if any, are they required to or allowed to consider (e.g., interests of employees, customers, the environment, etc.)?","JSCs and LCs – No requirement. Other considerations are permitted only to the extent they do not detract from shareholder value.\nCCs – No requirement. However, the articles of association of a CC may require that the patronage dividend paid to the owners shall be restricted or removed and the income of the CC shall be allocated to a fund for social interests, such as interests of employees or other public interests.\n"]
["Does your jurisdiction have organizational forms specifically designed for Social Enterprises? If so: a. What type(s) of organizational forms are they? b. How do they materially differ from the most closely analogous traditional organizational form? c. What are the main benefits for founders and funders of such organizational forms? d. Are there any restrictions on the use of these organizational forms (such as profit-caps, stakeholder involvement and impact reporting)? If there are, what are they? e. Are there any material differences in timing or costs for forming a Social Enterprise versus a traditional Enterprise? f. How prevalent and well known are Social Enterprise forms?","N/A\n"]
["Are Social Enterprises permitted to be formed and operated as Nonprofits? If so: a. Are Nonprofits that are Social Enterprises treated differently under the law as compared to Nonprofits that are not Social Enterprises, whether from a corporate, tax or other perspective? b. Are there any material benefits of, and/or restrictions on, using a Nonprofit form for Social Enterprises that does not apply to Nonprofits that are not Social Enterprises? c. Is there any type of “hybrid” Nonprofit form that requires less reporting and/or allows for faster formation? If so, please describe the drawbacks of utilizing this form (i.e. fewer tax benefits). d. How prevalent is the use of Nonprofits for Social Enterprises?","N/A\n"]
["Does your jurisdiction allow for worker-owned Enterprises, such as cooperatives? If so, please describe any material benefits of, and/or restrictions on, using such forms.","Yes. Under Turkish law, it is possible to incorporate worker-owned CCs.  Directors of a CC are required to be appointed amongst the owners of the CC. Thus, workers can obtain control in the management of the CCs. Additionally, worker-owners would have the right to freely determine the provisions of articles of association of the CC especially regarding distribution of patronage dividend and allocation of funds for workers' interests, etc.\nFor worker-owned CCs, no restriction is provided under applicable laws however, directors of CCs must be Turkish citizens, who are not appointed as a director of another CC having the same field of activity and condemned for crimes against the government; constitution or fraud, bribery, etc.\n"]
["Are there unique reporting requirements for Social Enterprises? If there are, please describe them. Please also discuss what government bodies Social Enterprises are required to report to.","N/A\n"]
["In your jurisdiction, has case law and jurisprudence evolved to address Social Enterprises? If there is meaningful jurisprudence around Social Enterprises, please provide some brief examples.","N/A\n"]
["Does your jurisdiction have any ESG requirements for Enterprises generally? If it does, please describe.","Under different applicable laws, environmental, social and governance related requirements are provided. However, these are not general requirements applicable to all Enterprises and may vary in terms of the type of the Enterprise, the location of the Enterprise, the scale of the Enterprise, etc. For instance, for Enterprises conducting activities in organized industrial zones an environmental impact assessment report is required prior to commencement of activities.\n"]
["Does your jurisdiction have any ESG requirements specifically for Social Enterprises? If it does, please describe.","N/A\n"]
["Does your jurisdiction have any ESG requirements for investors? If it does, please describe.","No.\n"]
["II. Funding"]
["Are any major investor classes (e.g., pension funds, mutual funds, etc.) required to look at ESG issues when making investment decisions in your jurisdiction? a. If they are, please describe the requirements. b. If they are not, are they permitted to consider such factors? c. What other relevant factors do investors tend to consider (aside from profit motive).","There are several sustainability mutual funds and pension funds that are obliged to invest 80% of their portfolio in shares listed in the “BIST Sustainability Index” pursuant to their fund bylaws.\nIn general, funds are permitted to consider ESG issues.\nCompanies are permitted to make donations within a monetary limit determined by their general assembly. \n"]
["What kinds of philanthropic funding do Social Enterprises in your jurisdiction commonly receive (e.g., grants, charitable investment, traditional investment)?","N/A\n"]
["How prevalent, if at all, are new for-profit impact investments in your jurisdiction (e.g. traditional instruments with impact terms, new investment instruments, aggregation with philanthropic capital, community based funding, etc.)?","We observe international development banks are active in such type of investment.\n"]
["What are the types of government funding and support available to Social Enterprises, if any, available in your jurisdiction (e.g., grants, investments, bonds, and guarantees)? a. How difficult is it for Social Enterprises to obtain government funding? b. Is any government funding limited to Enterprises incorporated using Social Enterprise forms?","Republic of Turkey Ministry of Family, Labour and Social Services General Directorate of Welfare, Turkish Small and Medium Enterprises Development Organization (KOSGEB) and many local development agencies provide funding as grants or loans to Social Enterprises.\n"]
["Are there any companies that are formed as a Social Enterprise listed on your jurisdiction’s leading securities exchange(s)?","A Social Enterprise Category is not available on Turkey’s leading security exchange, BIST.  \n"]
["To what extent are publicly traded Enterprises required to disclose ESG related factors in annual reports/public filings in your jurisdiction.","Publicly traded Enterprises are not required to disclose ESG related factors, in general. However, industry based disclosures might be required to include these factors.   \n"]
["How prevalent, if at all, are impact bonds in your jurisdiction?","No impact bonds are available.\n"]
["In your jurisdiction, are there any restrictions on foreign investments or donations that are unique to Social Enterprises (whether incorporated as for profit entities or as Nonprofits)?","N/A\n"]
["Is “crowdfunding” legal in your jurisdiction? Are there rules under applicable securities laws that make it easier for smaller businesses or Social Enterprises to take money from investors that are not sophisticated/accredited/qualified under applicable statutes?","Crowdfunding is legal in Turkey and equity-based crowdfunding is regulated under Capital Markets legislation. In order to qualify as a project/company to raise funds through equity-based crowdfunding, such project/company shall carry out technology or production activities. A regulation on debt-based crowdfunding is planned to be issued by the Capital Markets Board within the next year, which may create a new way of funding for the Social Enterprises. We observed that small size IPO’s are carried out and the stock exchange has a sustainability index.  \n"]
["III. Tax"]
["Are there any tax exemptions that are uniquely available for Social Enterprises? a. Please describe any tax exemptions that are available and whether they are partial or full. b. Are they dependent on the Social Enterprise utilized using a specific organizational form (e.g., for profit vs. Nonprofit form)? c. Please describe any other key requirements of the available tax exemptions (e.g., restrictions on sources or uses of funds, restrictions on commercial activities, etc.).","There are tax exemptions available for Nonprofits generally, but there are no tax exemptions that are uniquely available for Social Enterprises since there are no organizational forms specially designed for Social Enterprises in Turkey.\nNonprofits (whether or not Social Enterprise) have two key tax exemption provisions, one being that they do not have to pay income tax themselves, and the other being that donors may take deductions on their reported income.\n"]
["Are individuals or other organizations able to provide tax deductible donations to for-profit Social Enterprises? If they are, please describe any restrictions applicable to tax deductible donations?","No.\n"]
["Are there any other tax benefits uniquely available for Social Enterprises? (e.g. deferrals, favorable tax rates, business deductions, etc.)","No.\n"]
["Does your jurisdiction provide for reciprocal recognition of tax-exempt status that has been granted under the law of any other jurisdictions?","No.\n"]
["IV. Governmental Infrastructure"]
["Does your jurisdiction have Regulatory Sandboxes or similar policy frameworks for Social Enterprises? If it does, please describe.","N/A\n"]
["What government operational support, resources, training or services, are available for small businesses or Social Enterprises?","There are government grants and loan guarantees available for small businesses. The      Small And Medium Enterprises Development Organization provides support to small businesses in diverse areas including entrepreneurship supports, R&D, technological production and domestication support, enterprise development, growth and internationalization supports, SME finance supports, etc.\n"]
["Are there different compliance requirements for different types of Social Enterprises than for traditional Enterprises? Please provide examples if there are.","N/A\n"]
["Is there a dedicated government agency or department that oversees Social Enterprises? If there is, please describe its mandate and effectiveness.","N/A\n"]
["Is there a different bankruptcy system available for Social Enterprises?","N/A\n"]
["VI. Miscellaneous"]
["What are the average time and filing fees to form an Enterprise in your jurisdiction?","Incorporation of Enterprise in Turkey would take up to 5-7 business days following submission of the incorporation documents to the relevant trade registry depending on the workload of the same. Besides, the amount of the minimum share capital required, if any ( e.g. TL 50,000 for JSCs and TL 10,000 for LCs), filing fees involve notary fees of certain incorporation documents and incorporation charges paid to the trade registries, which are quite reasonable.\n"]
["What government or third-party certifications or accreditations, if any, are available for Social Enterprises that allow for access to benefits e.g. funding, beneficial tax status, etc.? Please provide examples and briefly describe them as well as the standards there are to maintain them.","N/A\n"]
["Please describe whether, in your opinion, startups and other entrepreneurial Enterprises generally can easily form and flourish in your jurisdiction.","Yes, startups can easily form and flourish in Turkey. They have a number of Enterprise forms available to choose from and incorporation processes are mostly fast, cheap and simple. Additionally, there is no restriction for foreign investors except for certain regulated areas.\n"]
["Please describe whether, in your opinion, Social Enterprises, in particular, can easily form and flourish in your jurisdiction.","N/A\n"]
["Please describe whether in your opinion there are any laws that are obstructive to the formation of Social Enterprises (i.e. that actively disfavor or penalize, or otherwise discourage their formation) in your jurisdiction (for example, are Social Enterprises subject to legislation prohibiting inclusion of Social Enterprises in government contract procurement)?","N/A\n"]
["In your jurisdiction, are there any major fraud concerns or defects due to corruption or fraud that should be addressed? If there are, please briefly discuss the concerns or defects.","No.\n"]
["What changes to the law do you think would be most beneficial to enabling Social Enterprises to flourish in your jurisdiction?","Organizational forms specially designed for Social Enterprise should be created first.\nThereafter, certain benefits (such as tax related benefits, government grants, financial benefits, requirements-driven flexible governance rules) should be accorded to such Social Enterprises to enable their growth.\n"]
["What changes to the law do you think would be most beneficial to enhancing the social and environmental responsibility of Enterprises generally (whether or not Social Enterprises)?","Implementing general ESG rules and regulations that shall be applicable to all Enterprises and providing effective monitoring systems to ensure their appropriate application by Enterprises (e.g. through public disclosure platforms) would create a positive pressure on Enterprises and would also create a transparent vision for the benefit of investors and consumers. \n"]
["Is there anything else you would like to add or guidance you would like to provide? Are there any questions we should have asked but did not?","No. Thank you for requesting our involvement in this survey.\n"]