Doing Business in Turkey - Pekin & Pekin · Portfolio investment Legal persons resident outside Turkey can freely pur-chase and sell all kinds of Turkish securities and other capital

Doing Business in... Handbook 2011 Country Q&A

© This article was first published in the PLCCross-border Doing Business in... Handbook 2011 and is reproduced with the permission of the publisher, Practical Law Company.

Doing Business in Turkey

Irmak Samir, Zeynep Tezcan, Okan Or and Naz Tamer Pekin & Pekin (Lex Mundi Member Firm)

www.practicallaw.com/7-501-1410

LEGAL SYSTEM

1. What is the legal system (civil law, common law or a mixture of both)?

The Republic of Turkey (Turkey) has a civil law system based on European continental law.

FOREIGN INVESTMENT

2. Are there any restrictions on foreign investment (in-cluding authorisations required by central or local government)?

Portfolio investment

Legal persons resident outside Turkey can freely pur-chase and sell all kinds of Turkish securities and other capital market instruments using banks and brokerage firms in Turkey as intermediaries (Article 15(d)(i), De-cree No. 32 Regarding Protection of the Value of Turkish Currency (as amended) issued by the Council of Minis-ters under the Law Regarding Protection of the Value of Turkish Currency (Law No. 1567) (as amended) (Decree No. 32)). There are no restrictions on foreign investors purchasing or selling a Turkish company’s securities, provided the transaction is made through an authorised brokerage firm in Turkey. However, there are special pri-or approval requirements for owning shares and/or vot-ing rights reaching certain thresholds in certain types of regulated companies. The companies subject to these requirements are generally:

� Banks.

� Brokerage companies.

� Insurance companies.

� Television and/or radio companies.

� Energy companies.

� Asset management companies.

� Financial leasing companies.

� Factoring companies.

� Finance companies.

� Financial holding companies.

� Air transportation companies.

� Any other company regulated by government authority.

Regulatory permission must be obtained from the rele-vant authority irrespective of whether or not the relevant company is listed.

Direct investment

Foreign investors are free to make direct foreign invest-ments in Turkey (Direct Foreign Investments Law No. 4875, 2003 (FDIL)). “Direct foreign investment” refers to any of the following:

� The foundation of a new company or opening of a branch.

� The acquisition of capital shares directly, not through the Securities Exchange.

� The acquisition of capital shares equal to at least 10% of a company or acquisition of voting securi-ties at the same rate in a company quoted and traded in the Securities Exchange by a foreign investor using economic assets supplied from over-seas or from the domestic market.


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However, under the amendment to the Title Deed Law, foreign persons can only acquire up to 10% of designat-ed zoning areas in each district. Companies incorporated in Turkey by foreign investors (or companies with foreign shareholders) can only acquire and use real properties in order to conduct the activities stated in their articles of association. These real properties cannot be in military or private security zones. Foreign companies can only acquire real property in limited circumstances, under certain laws such as the:

� Petroleum Law.

� Encouragement of Tourism Law.

� Banking Law.

� Industrial Zones Law.

3. Are there any exchange control or currency regulations?

Foreign investors can freely transfer the following (any of which can arise from the activities and operations of foreign investors in Turkey) through Turkish banks (De-cree No. 32):

� Net profits.

� Dividends.

� Sale, liquidation and indemnity proceeds.

� The amount to be paid in consideration of licence, management and similar agreements.

However, banks must inform the relevant authority of Turkish lira transfers executed abroad, excluding pay-ments for exports, imports and invisible transactions that are above the equivalent of US$50,000 (as at 1 October 2010, US$1 was about EUR0.7), within a 30-day period starting from the date of transfer.

Currency transactions are also subject to notification re-quirements under the Law Regarding the Prevention of Laundering of Crime Revenues (Law No. 5549, 2006).

4. What grants or incentives are available to investors? Are any of these aimed specifically at foreign investors?

Grants and incentives are available to both Turkish and foreign investors.

Investment incentives

The incentives include:

� An investment allowance.

� Tax exemptions (customs duties).

� Subsidised credits.

� Export credits.

� Insurance of export receivables.

� Tax exemptions.

� Energy subsidies.

� State aid for certain expenses.

Free trade zones

Extensive incentives are available to investors in free trade zones and include (Law No. 5084, 2004):

� A licence to set up and operate.

� A location (office).

� Tax advantages such as:

� corporate tax exemption;

� income tax exemption related to salaries.

Other incentives

Technology and development zones (known as techno parks) grant significant advantages to investors (Law No. 4691, 2001). Research and development incentives are available and include:

� State aid for research and development activities.

� Corporate tax exemption.

� Income tax exemption.

A special regulation concerning promoting investment and employment in less developed regions of the coun-try provides for direct state aid in these regions.

Foreign investors required to give up their investment for public purposes must be compensated fairly.




BUSINESS VEHICLES

5. What is the most common form of business vehicle used by foreign companies to conduct business in your jurisdiction? In relation to this vehicle, please provide details on:

� Registration formalities (including timing).

� Minimum (and maximum) share capital.

� Whether shares can be issued for non-cash consideration, such as assets or services (and any formalities).

� Any restrictions on the rights that can attach to shares.

� Any restrictions on foreign shareholders.

� Management structure and any restrictions on foreign managers.

� Directors’ liability.

� Parent company liability.

� Reporting requirements (including filing of ac-counts) and cost of compliance.

The most common forms of corporate vehicles estab-lished in Turkey are joint stock companies (JSCs) and limited liability companies (LLCs).

� Registration formalities. A JSC must be incorporat-ed with at least five shareholders and an LLC with at least two shareholders. Both types of company must comply with the following procedures:

� the articles of association (articles) must be executed by the shareholders and notarised by a Turkish notary public;

� for certain JSCs such as banks and intermedi-ary institutions, the Ministry of Industry and Commerce must authorise the adoption of, and modifications to, the articles;

� the articles must be registered with and pub-lished in the Trade Registry Gazette;

� one-quarter of the company’s capital must be paid up within three months and the remaining capital within three years of registration.

� Share capital. The minimum share capital of an LLC is TRY5,000 (as at 1 October 2010, US$1 was about TRY1.5) and for a JSC TRY50,000. There is no maximum share capital.

� Non-cash consideration. Companies can issue shares for a non-cash consideration, provided the consideration is valued by experts appointed by the Turkish courts.

� Rights attached to shares. There are no restrictions on rights attached to shares other than those in the company’s articles.

� Foreign shareholders. There are no restrictions on foreign shareholders.

� Management structure. A JSC is managed by a board of directors comprising at least three members. An LLC is managed by its managers and shareholders. There are no restrictions on foreign directors.

� Directors’ liability. Directors who can represent and bind the company with their signatures are jointly and severally liable for the acts set out in the Turk-ish Commercial Code 1956 (TCC).

� Parent company liability. A parent company is gener-ally only liable if it guarantees the subsidiary’s debts.

� Reporting requirements. A company must file the following with the Trade Registry:

� the company’s articles;

� a signed signature circular (a notarised docu-ment identifying those authorised to bind the company);

� a signature declaration (a notarised document providing specimen signatures of the persons identified in the signed signature circular);

� details of directors;

� details of the registered office;

� details of any branches that are opened and closed;

� an annual auditors’ report;

� an annual activity report of the board of directors;

� an annual balance sheet;

� an annual income statement.

In addition, foreign companies must give the Foreign Investment General Directorate (FIGD) information relating to (Communiqué on the Imple-mentation of the FDIL 2003):

� the capital and activities of the company;




� payments made to the capital accounts;

� share transfers.

Turkish companies with foreign shareholders must also submit any information and documents requested by the FIGD.

EMPLOYEES

6. What are the main laws regulating employment relationships?

Employment relationships are regulated by the Labour Law Code (Law No. 4857, 2003) (Labour Code) and its relevant regulations. The Labour Code applies to both Turkish and foreign employers and employees working for a Turkish entity in Turkey.

7. Is a written contract of employment required? Are any agreements and/or implied terms likely to govern the employment relationship?

Open-ended employment contracts lasting for one year or more must be executed in writing.

Employment contracts must be in Turkish where they are concluded between employees who are Turkish citi-zens and legal entities incorporated under the laws of Turkey. Failure to do so invalidates the contract.

If there is no written contract, the employer must, within two months of the start of employment, give the em-ployee a document outlining:

� General and specific working conditions.

� Daily or weekly work periods.

� Term of the employment contract, if specified.

� Salary and the intervals at which it will be paid.

� Additional payments, if any, such as allowances, bonuses, premiums and so on.

� Conditions of termination.

Collective labour agreements also govern employment relationships.

8. Are employees entitled to management representa-tion and/or to be consulted in relation to corporate transactions (such as redundancies and disposals)?

Employees are not entitled to direct management rep-resentation or consultation. Collective bargaining agree-

ments provide for employee representation and consul-tation through trade unions.

There cannot be more than one collective bargaining agreement covering a workplace at any one time. Un-less otherwise agreed in the collective bargaining agree-ment, the provisions of individual employment agree-ments cannot contradict the provisions of the collective bargaining agreement.

9. How is the termination of individual employment contracts regulated?

The Labour Code stipulates the categories of employ-ee entitled to job security and sets out the grounds on which an employment contract can be terminated. If the employer cannot prove the grounds exist, the employee must be either:

� Reinstated if possible.

� Paid a special indemnity by the employer.

The court determines the total, which can vary from four months’ to eight months’ salary.

10. Are redundancies/mass layoffs regulated? If so, please give details.

Collective dismissal provisions apply to all workplaces employing more than 20 employees. A collective dis-missal occurs where, on the same date or within one month:

� At least ten employees are dismissed in a work-place employing between 20 and 100 employees.

� At least 10% of the employees are dismissed in a workplace employing between 101 and 300 employees.

� At least 30 employees are dismissed in a workplace employing more than 300 employees.

If the employer is contemplating collective dismissals for economic, technological, structural or similar rea-sons or other reasons of necessity, it must supply writ-ten information at least 30 days before the intended dismissal to the following:

� The workplace trade union representatives (if any).

� The relevant regional directorate of the Social Secu-rity Authority.

� The relevant Labour District Office.




This notice must contain the following information:

� Grounds for dismissal.

� The number and categories of employees affected.

� The time period within which the dismissal is anticipated to take place.

After the notice has been served, the employer must consult with the union representatives about measures that can be taken to avert or reduce the number of ter-minations, as well as to mitigate or minimise their ad-verse effects on the employees affected. A document recording the consultation must be drawn up at the end of the meeting.

Termination notices take effect 30 days after the notifi-cation of the relevant regional directorate.

In the event of a total closure of a workplace and the permanent discontinuance of operations, at least 30 days before the intended closure the employer must:

� Notify the relevant regional directorate of the Social Security Authority.

� Notify the relevant Labour District Office.

� Post the relevant announcement in the workplace.

An employer may not use the collective dismissal proc-ess to circumvent the Labour Code’s job security provi-sions.

Failure to follow the collective dismissal process can result in the employer or the employer’s representative being fined TRY412 for each employee dismissed, ac-cording to 2010 figures (Article 100, Labour Code).

11. Do foreign employees require work permits and/or residency permits? If so, how long does it take to obtain them and how much do they cost?

Foreign persons must obtain a permit before starting work either independently or for an organisation in Tur-key, unless otherwise provided for in any bilateral or multi-lateral agreements to which Turkey is a party (Law on Work Permits for Foreigners (Law No. 4817)).

A foreign person intending to work in Turkey must obtain the following:

� Work permit (from the Ministry of Labour and Social Security). This is granted within 30 days of filing.

� Work visa (from the diplomatic representatives of Turkey).

� Residence permit (from the Foreign Affairs Depart-ment of the police headquarters in the city where the head office of the employer is located) within 30 days of entering the country. A residence permit can be obtained within three business days.

A work permit is valid only when the required work visa and residence permit are obtained. Foreign persons who have been issued with a work permit must request a visa to enter the country no later than 90 days after receiving the work permit.

TAX

12. In relation to employees, what constitutes tax resi-dency in your jurisdiction?

Individuals resident in Turkey permanently, or who stay more than six months during any calendar year, have full tax liability.

Individuals resident outside Turkey or who stay for less than six months in Turkey in any calendar year have lim-ited tax liability.

13. What income tax or social security contributions must the following pay:

� Tax resident employees?

� Non-tax resident employees?

� Employers, in relation to their employees?

Tax resident employees

Tax resident employees are subject to tax on their world-wide non-wage income in 2010 at the following rates:

� On income up to TRY8,800: 15%.

� On income up to TRY22,000: TRY1,320 on the first TRY8,800, plus 20% on the excess.


� On income more than TRY50,000: TRY11,520 on the first TRY50,000, plus 35% on the excess.




As of 1 January 2010, tax resident employees are sub-ject to tax on their worldwide wage income in 2010 at the following rates:

� On income up to TRY8,800: 15%.



� On income more than TRY76,200: TRY18,594 on the first TRY76,200, plus 35% on the excess.

Non-tax resident employees

Non-tax resident employees are taxed solely on their in-come derived from activities performed in Turkey at the same income tax rates applicable to tax resident em-ployees. However, the double tax treaties may provide reduced rates or exceptions.

Employers

Employers must pay the following amounts as a portion of an employee’s gross salary (Law on Social Insurances and General Health Insurance Law, Law No. 26200, 16 June 2006):

� Disablement, old age and death premiums (long-term insurance): 11%.

� Work accidents, occupational disease, disease and maternity premiums (short-term insurance): between 1% and 6.5%, determined by the Social Security Institution.

� General health insurance premiums: 12.5% of the revenue for employees who are subject to short- and long-term insurances, and 12% for employees who are only subject to general health insurance.

14. In relation to business vehicles, what constitutes tax residency in your jurisdiction?

Companies incorporated in Turkey or branch offices of non-resident companies (parents) established in Turkey are fully tax liable business entities (Corporation Tax Law).

15. Please give details of the main taxes that potentially apply to a tax resident business vehicle (including rates).

Corporate tax

A corporation’s net income is subject to a corporate in-come tax rate of 20%.

Value added tax (VAT)

The transfer of goods and the rendering of services, in-cluding imports into Turkey, are generally subject to VAT at 18%.

There are some exceptions, such as a 1% rate on lease payments of financial lease arrangements (including those with non-resident financial lessors), and increased VAT rates on the sale of some luxury goods and cars.

Excise tax

The sale of certain goods, such as cars, cigarettes, oil, energy and natural gas, is also subject to additional ex-cise and special consumption taxes that may be as high as 50% or more.

Banking and insurance transaction tax (BITT)

All revenues of resident banks, finance and insurance companies, such as interest, commission, premiums and other fees and charges, are subject to BITT at 5%. Reduced rates up to 0% are available for certain trans-actions.

Stamp tax

All documents that contain a monetary amount of un-dertaking are subject to stamp tax at 0.825%. However, exemptions are available in relation to certain trans-actions, such as cross-border financing, issuance and transfer of securities, exportation, and so on, provided such exemptions are explicitly granted by law.

Resource utilisation support fund levy (RUSFL)

In order to direct the investments and to lower the costs incurred in special loans in accordance with develop-ment plans and yearly programmes, the Resource Utili-sation Support Fund was established within the Central Bank of Turkey in 1988.

The RUSFL applies on the following transactions:

� Credits supplied by Turkish Banks and financial institutions.

� Credits obtained by Turkish Banks and financial institutions from abroad.

� Credits obtained by Turkish residents, other than banks and financial institutions, from abroad.

� Imports realised under acceptance credits, term let-ters of credit and on a cash-against-goods basis.

RUSFL is applied on the principal amount of the loan amount at a general rate of 3%. Inter-bank lending and funding for terms longer than one year are not subject to RUSFL. The 15% RUSFL on consumer credits has




recently been reduced to 10% as part of an anti-crisis measures package.

Other taxes

Other taxes relating to the environment, property, motor vehicles and inheritance can also apply.

16. How are the activities of non-tax resident business vehicles taxed?

Non-tax resident business vehicles are taxed solely on their income derived from activities in Turkey at the same rate as tax-resident business vehicles (see Question 15).

17. Please explain how each of the following is taxed:

� Dividends paid to foreign corporate shareholders.

� Dividends received from foreign companies.

� Interest paid to foreign corporate shareholders.

� Intellectual property (IP) royalties paid to foreign corporate shareholders.

� Dividends paid. A withholding tax of 15% applies, unless reduced by a double tax treaty.

� Dividends received. Real persons are subject to tax-ation from 15% to 35% (see Question 13) whereas legal entities pay corporate tax of 20% (although a treaty reduction may apply). An exemption applies to dividend flows among resident companies.

� Interest paid. Interest paid by a Turkish entity to a foreign corporate shareholder is subject to a withholding tax at 10%. There is no withholding obligation if the foreign lender is a bank (other than a branch of a Turkish bank) or a licensed financial institution located outside Turkey. (See also Question 18.)

� IP royalties paid. Unless a double taxation treaty exists, a withholding tax of 20% applies to sums obtained on the assignment or transfer of any of the following:

� copyrights;

� franchises;

� patents;

� operation rights;

� trade names;

� trade marks;

� other similar intangible rights.

Tax treaties generally reduce the rate to 10%.

18. Are there any thin capitalisation rules (restrictions on loans from foreign affiliates)? If so, please give details.

Thin capitalisation rules apply if the total loans exceed either:

� Three times the Turkish company’s total equity, from shareholders or other related parties.

� Six times the Turkish company’s total equity, where the shareholder or related party is a bank or financ-ing company.

A related party is a company in which a Turkish share-holder owns at least 10% of the share capital. However, under the recent Transfer Pricing Regulations, the Turkish Internal Revenue Service may broaden this definition.

Interest and FX losses on any borrowing that is deemed thin capitalisation are non-deductible. In addition, such parts of any borrowing are considered profit and are sub-ject to dividend taxation.

19. Must the profits of a foreign subsidiary be imputed to a parent company that is tax resident in your ju-risdiction (controlled foreign company rules)?

Controlled foreign company (CFC) rules apply if the sub-sidiary operates out of a tax haven jurisdiction. A penalty withholding tax of 30% applies on all accruals of and payments by the resident parent to its tax haven subsidi-ary. Countries that are party to a tax treaty with Turkey usually prevent CFC rules from applying.

20. Are there any transfer pricing rules? If so, please give details.

A Turkish company must apply arm’s-length transfer prices for related parties.

Transfer prices are determined in accordance with Or-ganisation for Economic Co-operation and Development (OECD) transfer pricing guidelines, which recognise three acceptable transfer pricing methods:

� Comparable price method.

� Cost plus method.

� Resale minus method.




Other methods are subject to approval by the Ministry of Finance.

The Turkish Internal Revenue Service introduced a very broad definition of related entities and individuals that are subject to non-compliance, so all taxpayers involved in inter-company transfer pricing should make use of the advance clearing option.

21. How are imports and exports taxed?

Imports of goods and services are subject to VAT and customs tax, unless the resident importer qualifies for tax incentives available to producers that meet certain investment criteria. Exports of goods and services are generally exempt from VAT.

22. Is there a wide network of double tax treaties? If so, please give details.

Turkey has OECD and UN model double tax treaties with 70 countries, including the majority of EU countries and the US.

COMPETITION

23. Are restrictive agreements and practices regulated by competition law in your jurisdiction? If so, please give brief details.

The non-exclusive list of prohibited anti-competitive practices includes the following:

� Price-fixing.

� Partitioning markets or controlling resources.

� Controlling supply or demand.

� Complicating and restricting the supply of goods or services.

� Excluding firms operating in the market by boycotts or other behaviour, or preventing potential new competitors entering the market.

� Applying different conditions to equivalent trans-actions (with the exception of exclusive dealing agreements).

� Abuse of a dominant position through agreements or concerted actions with others.

INTELLECTUAL PROPERTY

24. Please outline the main intellectual property rights that are capable of protection in your jurisdiction. In each case, please state:

� Nature of right.

� How protected.

� How enforced.

� Length of protection.

Patents � Nature of right. An invention is patentable if it:

� is new;

� improves on the current state of the art; and

� is capable of industrial application.

There are two types of patents:

� a patent with examination, which is granted after objections from third parties and submis-sions from the applicant in response to those objections;

� a patent without examination, which is granted without considering the views of third parties.

The patent holder can prevent the production, sale, use and importation of the patented product or process.

� How protected. Protection is granted by registration with the Patent Institute and by:

� Decree Law No. 551 dated 1995 Pertaining to the Protection of Patent Rights and its imple-menting regulations;

� Law No. 4128 dated 1995 Pertaining to the Addition of the Penalty Provisions to the Decree Laws numbered 551, 554, 555 and 556 (Law No. 4128);

� unfair competition provisions in the Turkish Commercial Code (Law No. 6762, published in the Official Gazette dated 9 July 1956, No. 9353) (TCC).

� How enforced. A patent right is protected through civil and criminal actions before the specialist IP courts. A High Council of Judges and Prosecutors determine which of the Commercial Courts of First Instance and the Criminal Courts of First Instance are appointed as special courts and indicate their respective jurisdictions based on the request of the Ministry of Justice. The patent holder can seek:




� termination of the infringement and its ongoing acts;

� material and moral damages;

� an order to confiscate from the infringers the products and the equipment used to make them;

� an order for possession of the products confiscated (their value is deducted from the compensation awarded or, if they are more valu-able than the compensation, the patent holders repays the difference to the infringer);

� enforcement measures to prevent continued infringement, deletion of the patented invention from the infringer’s products or, if it is essential to prevent infringement, the destruction of the products and equipment used to make them;

� an order to disclose to the public and to those persons related to the infringer of the court’s judgment, at the offending party’s expense.

Patent infringement can be punishable by impris-onment for between one and two years and/or a fine between TRY14,000 and TRY46,000.

� Length of protection. A patent with examination is protected for 20 years. A patent without examina-tion is protected for seven years, and can be up-graded to a patent with examination on application at any time during this seven-year period.

Trade marks � Nature of right. To be registered, a trade mark

must be capable of distinguishing the goods or services of one undertaking from those of other undertakings. Goods are divided into 34 classes. Services are divided into 11 classes. A trade mark may consist of any sign that can be represented in graphic form, and published and reproduced in print, including:

� personal names;

� words;

� figures;

� letters;

� numbers.

The right holder can prevent the:

� use of any sign relating to the trade mark;

� use of the sign of the trade mark on any package;

� importation of the signed product;

� use of the sign in advertisements and business.

� How protected. The protection is granted by regis-tration with the Patent Institute and by Decree Law No. 556 dated 1995 Pertaining to the Protection of Trade Marks and its implementing regulations, Law No. 4128 and the TCC.

� How enforced. Enforcement is the same as for patents (see above, Patents).

� Length of protection. Protection lasts for ten years from the date of application for registration. This can be renewed indefinitely for additional ten-year periods upon the payment of a renewal fee.

Registered designs � Nature of right. To be registered, a design must:

� relate to the features of the whole or part of a product, or its ornamentation;

� be new; and

� have an individual character.

The right holder can (if there is more than one right holder, subject to the approval of the others) use the design, take necessary precautions to protect the de-sign, and license the use of the design to third par-ties. Third parties cannot make any dispositions on the design without the approval of the right holder.

� How protected. The protection is granted by regis-tration with the Patent Institute and by Decree Law No. 554 dated 1995 Pertaining to the Protection of Industrial Designs and its implementing regula-tions, Law No. 4128 and the TCC.

� How enforced. This is the same as for patents (see above, Patents).

� Length of protection. Protection lasts for five years from the date of application for registration. This can be renewed for additional five-year periods up to a maximum of 25 years.

Unregistered designs � Nature of right. An unregistered design is any shape

or configuration:

� determined solely by its technical function;

� dictated solely to allow it to fit to another product.

� How protected. Protection is under the unfair com-petition provisions of the TCC.




� How enforced. Unregistered designs are protected through civil and criminal actions before the courts. The action must be filed within one year starting from the date when the relevant party became aware of the infringement and in any case within three years of the date of the infringement. The action for annulment of the existing infringement is not subject to the period of limitation.

To claim compensation for a tangible three-dimen-sional design, the design owner must prove the design is not commonplace and has been infringed by copying.

� Length of protection. Protection lasts as long as the design continues to be distinctive in the minds of consumers and is used in commerce.

Copyright � Nature of right. Copyright is the ownership of any

kind of intellectual or artistic creation bearing the characteristics of its author. This includes the fol-lowing works:

� scientific (including computer programs);

� literary (which can also include computer programs);

� musical;

� artistic;

� cinematographic.

The right holder has the following economic rights:

� process (for example, translating, editing, com-piling or preparing for publication);

� duplication;

� publication;

� presentation (for example, reading, playing or displaying a work in public);

� transmission.

� How protected. Protection subsists automatically under:

� Law No. 5846 dated 1951 on Intellectual and Artistic Works;

� Law No. 5728 dated 2008 that amends the penalty provisions of Law No. 5846 in a way to comply with the Basic Criminal Laws and other related laws.

� How enforced. The owner of the work or the holder of moral or economic rights can seek to:

� stop the infringement;

� prevent future infringement;

� receive damages.

The infringer can be sentenced to imprisonment for between one and seven years or be liable to an administrative fine.

� Length of protection. Protection lasts for the life of the author plus 70 years. If the work has more than one author, this period ends 70 years after the last surviving author’s death.

Confidential information � Nature of right. Confidential information includes

trade secrets and inventions in enterprises.

� How protected. Trade secrets are automatically protected under the unfair competition provisions of the TCC. Any other confidential information must be protected by a confidentiality agreement. The right holder can prevent the disclosure of the confidential information to third parties.

� How enforced. Confidential information rights are protected through civil and criminal actions. The right holder can seek an injunction and compensation for the losses caused by disclosure of the confidential informa-tion. The board of directors can also be liable when confidential information is disclosed to third persons.

� Length of protection. Protection lasts as long as the information is maintained in confidence and is not generally known in the industry. However, the par-ties may set the duration of the protection.

MARKETING AGREEMENTS

25. Are marketing agreements regulated in your jurisdic-tion? If so, please give brief details in respect of the following arrangements:

� Agency.

� Distribution.

� Franchising.

� Agency. The TCC regulates:

� that the main activities of an agency shall be:

� relevant to a business enterprise;

� carried out within a defined area or region;

� carried out on a permanent basis;

� carried out based on a contract;




� the agent’s obligations, such as to:

� give notice;

� take measures to prevent damage or loss to the value of products while handled by an agent;

� an agent’s rights, such as to:

� remuneration;

� liens that an agent can hold over products;

� the termination of agency agreements;

� the obligations of compensating agents.

� Distribution. There is no specific law regulating distribution agreements. However, there are circum-stances, listed under the Communiqué on Block Exemptions Regarding Vertical Agreements 2002/2, in which a distribution agreement is exempted from the prohibitions under the Law on the Protection of Competition (Law No. 4054, 1994).

� Franchising. Franchise agreements are regulated by, among other things:

� Turkish Code of Obligations No. 818, 1926.

� Law on the Protection of Competition (Law No. 4054, 1994).

� Communiqué on Vertical Agreements 2002/2, which regulates:

� circumstances in which a vertical agree-ment is exempt from the prohibitions under Law No. 4054, 1994;

� assignment, sale and utilisation of intel-lectual property rights;

� validity of the non-competition clause.

E-COMMERCE

26. Are there any laws regulating e-commerce (such as electronic signatures and distance selling)? If so, please give brief details.

There are pieces of legislation regulating e-commerce in Turkey in areas such as e-government, e-banking and e-business.

Electronic signatures are regulated by the Electronic Signature Law (Law No. 5070, 2004) (ES Law). An electronic signature has the same legal consequences as a physical signature, except in certain specific trans-actions and security agreements (Article 5, ES Law).

DATA PROTECTION

27. Are there any data protection laws? If so, please give brief details.

There are no separate laws and regulations dealing with data protection. However, privacy and data security are regulated by the provisions of general laws and regula-tions, such as the:

� Turkish Constitution.

� Banks Law.

� Criminal Procedure Code.

� Civil Procedure Code.

� Enforcement and Bankruptcy Law.

� Tax Procedural Law.

� Law Regarding the Protection of the Value of Turk-ish Currency.

� Telegraph and Telephone Law.

� Radio Law.

These regulations cover:

� Intellectual property and pharmaceutical data.

� The collection of customer data.

� The protection of customer privacy.

� Banking secrecy.

� Public authorities and privacy.

� Other secrecy related laws and regulations.

PRODUCT LIABILITY

28. Are there any laws regulating product liability and product safety? If so, please give brief details.

Product liability and product safety are regulated by the:

� Code of Obligations (Law No. 818, 1926).

� Law Regarding the Protection of the Consumer (Law No. 4077, 1995).

� Law on the Preparation and Implementation of Technical Legislation on Products, which, to a large extent, implements Directive 2001/95/EC on general product safety.

� Regulation on Market Surveillance and the Auditing of Products.




Product liability is also regulated under other various pieces of legislation specific to certain goods or services such as textile, food and cosmetics.

The manufacturer or seller of a product is held liable if the product:

� Is defective.

� Is not fit for its purpose.

� Does not display the usual qualities expected of such a product.

The supplier, dealer, agent, manufacturer or producer, importer and creditor, who provided a means of payment to the consumer, are all jointly and severally liable to the consumer for defective goods.

Qualified. Turkey, 2008

Areas of practice. Competition; tax; corporate/M&A.


Areas of practice. Corporate/M&A; energy; hedge funds.

NAZ TAMERPekin & PekinT +90 212 313 3500F +90 212 313 3535E [email protected] www.pekin-pekin.com

OKAN ORPekin & PekinT +90 212 313 3500F +90 212 313 3535E [email protected] www.pekin-pekin.com


Areas of practice. Corporate law; M&A; real estate law; insurance law; employment law; energy.


Areas of practice. Capital markets; banking; corporate/M&A; anti-dumping.

ZEYNEP TEZCANPekin & PekinT +90 212 313 3500F +90 212 313 3535E zakı[email protected] www.pekin-pekin.com

IRMAK SAMIRPekin & PekinT +90 212 313 3500F +90 212 313 3535E [email protected] www.pekin-pekin.com

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Doing Business in Turkey - Pekin & Pekin · Portfolio investment Legal persons resident outside Turkey can freely pur-chase and sell all kinds of Turkish securities and other capital