| FOREIGN
DIRECT INVESTMENT LAW |
Law
No. 4875
Date of Passage: 5 June, 2003
Date of Official Gazette: 17 June, 2003
Article
1. The objective of this
Law is to encourage foreign direct investments; to
protect the rights of foreign investors; to define
investment and investor in line with international
standards; to establish a notification-based system
for foreign direct investments rather than screening
and approval; and thus regulate the principles to
increase foreign direct investments through established
policies. This Law establishes the treatment to be
applied to foreign direct investments.
Article
2. The terms used in this
Law shall have the following meanings:
a)
Foreign Investor is defined as :
1)
Real persons who possess foreign nationality and Turkish
nationals resident abroad,
2) Foreign legal entities established under the laws
of foreign countries and international institutions,
who make foreign direct investment in Turkey.
b)
Foreign direct investment is defined as :
i)
Establishing a new company or branch of a foreign
company
ii) Share acquisitions not by means of capital markets,
and share acquisitions through capital markets
where the foreign investor owns 10 percent or more
of the shares or voting power,
By
means of but not limited to the following economical
assets:
1)
Assets acquired from abroad by the foreign investor:
-Capital in cash in the form of convertible currency
bought and sold by the Central Bank of Turkey,
- Stocks and bonds of foreign companies (other than
government bonds),
- Machinery and equipment,
- Industrial and intellectual property rights
2)
Assets procured from Turkey:
- Reinvested earnings, revenues, financial claims,
or any other investment-related rights of financial
value
- Commercial rights for the exploration and extraction
of natural resources.
c)The
Undersecretariat: The
Undersecretariat of Treasury.
| Principles
Concerning Foreign Direct Investments |
Article
3.
a) Freedom to Invest and
National Treatment
Unless
stipulated by international agreements and other special
laws:
1. Foreign investors are free to make foreign direct
investments in Turkey,
2. Foreign investors shall be subject to equal treatment
with domestic investors.
b)
Expropriation and Nationalisation
Foreign
direct investments shall not be expropriated or nationalised,
except for a public purpose and upon compensation
in accordance with due process of law.
c)
Transfers
Foreign
investors can freely transfer abroad, through banks
or special financial institutions: profits, dividends,
proceeds from the sale or liquidation of all or any
part of an investment, amounts arising from license,
management and similar agreements, and reimbursements
and interest payments arising from foreign loans.
d)
Access to Real Estate
Companies
may freely acquire real estate or limited rights in
rem through a legal entity in Turkey established or
with participation by foreign investors, provided
such acquisitions are permitted for Turkish citizens. (Cancelled by the Constitutional Court of the Republic of Turkey (CCRT). The CCRT’s decision was published in the Official Gazette on 16 April 2008 and wil come into effect six months later on 16 October, 2008.)
(According to the
article 36 of Tittle Deeds Law, legal entities (companies) established or participated in Turkey by foreign investors can acquire real estate or limited rights in rem in Turkey in line with operational purposes set in company’s Articles of Association. For further information please visit buying property pages.)
e)
Dispute Settlement
For the settlement of disputes
arising from investment agreements subject to private
law and disputes arising from conditions and contracts
made with the administration and under which concessions
concerning public services are granted, foreign investors
can apply either to the authorised local courts, or
to national or international arbitration or other
means of dispute settlement, provided that the conditions
in the related regulations are fulfilled and the parties
agree thereon.
f)
Valuation of Non-cash Capital
Non-cash capital is valued
within the regulations of Turkish Commercial Law.
Stocks and bonds of companies residing abroad will
be accepted as foreign capital share of foreign investors
and the values determined by the courts of the home
country, or other relevant authorities in the home
country, or any other international institutions performing
valuations will be accepted.
g)
Employment of Expatriates
Foreign personnel working
permits are issued by the Ministry of Labour and Social
Security for foreign personnel to be employed in the
companies, branches and entities established within
the scope of this Law.
In
a Regulation to be prepared jointly by the Undersecretariat
of Treasury and the Ministry of Labour and Social
Security, according to Article 23 of the Law No. 4817
on Foreign Personnel Working Permits dated 27 February
2003, the companies and entities with foreign capital
which shall be in the context of the Regulation, the
definition of the key personnel in the scope of the
Regulation and other special procedures and principles
concerning the work permits of key personnel will
be determined.
Provisions
stipulated in Article 14, paragraph 1, sub-paragraph
(b) of Law No. 4817 will not be applicable to personnel
to be employed within the context of this Regulation.
The conditions under which the provisions stipulated
in paragraph 1 of Article 13 of Law No. 4817 are to
be applied to key foreign personnel employed will
be specified in the Regulation.
h)
Liaison Offices
The
Undersecretariat is authorised to permit foreign companies
established under the laws of foreign countries to
open liaison offices, provided that they do not engage
in commercial activities in Turkey.
| Determination
of Policies and Data Collection |
Article
4. Taking into account the
development plans, annual programs, general economic
status of the country, trends in international investments
and the opinions of related public institutions and
private sector professional organisations, the Undersecretariat
is authorised to determine the general framework of
policies concerning foreign direct investments, and
for this purpose, participate in the activities of
other organisations. The consent of the Undersecretariat
shall be taken before any amendment or enactment of
a regulation related with foreign direct investments.
For
the purpose of establishing and developing an information
system related to foreign direct investments, the
Undersecretariat is authorised to request statistical
information on investments from all public institutions
and private sector professional organisations.
Foreign
investors shall submit statistical information on
their investments according to the procedures and
principles to be determined by a regulation to be
enacted by the Undersecretariat. Such information
cannot be used as evidence or for any means other
than for statistical purposes.
Article
5.
a)
Existing Companies with Foreign Capital
All
companies with foreign capital established pursuant
to Law No. 6224 dated 18 January 1954 shall be subject
to this Law, reserving their granted rights.
b)
Regulations
The
implementing procedures for this Law will be determined
in a regulation to be prepared by the Undersecretariat
within one month of the publication of the present
Law.
c)
Repealed Provisions
The
Law No 6224 for Encouragement of Foreign Capital dated
18 January 1954 is repealed. The references made to
Law No. 6224 and its regulations and amendments are
considered as referring to this Law.
d)
Any alteration concerning
the articles of this Law is only regulated by means
of amending and appending provisions to the present
Law.
Provisional
Article 1.The provisions
of the decrees, communiqués and circulars in effect,
which are in conformity with this Law, shall remain
in force until new regulations to regularise the implementation
of this Law take effect.
Article
6.Law shall come into force
on the date of its publication.
Article
7.The Council of Ministers
is entrusted with the enforcement of this Law.
