Registration of a CJSC with Hidden Beneficial Owner + Issuance of Bearer Shares in Turkey

If you have a company in Turkey or you are just planning to open a Closed Joint-Stock Company in this jurisdiction and start issuing shares, the team of experts at our international portal is there to provide professional assistance to you.

The OECD and the FATF marked the start of a deoffshorization era as they actively took to legalizing business and disclosing information on beneficiaries, which has become a stumbling block for many businessmen. The names of investors are now displayed in the company registers and the amount of assets is no longer a secret for anyone, naturally resulting in dissatisfaction of the vast business community. 

It was easy to become a hidden beneficiary in the good old days by purchasing bearer shares, but this scheme is practically non-existent at present. Of all the well-known jurisdictions whose domestic legislation allows for the issuance of such securities, Turkey offers the best conditions for non-residents. You cannot return to the past, but you still can use an advanced version elaborated by Turkey to comply with global anti-money laundering regulations.

Types of Shares Issued by OJSC and CJSC in Turkey

In terms of organizational and legal form, there are several types of companies in Turkey, including Open Joint-Stock Companies (OJSC) and Closed Joint-Stock Companies (CJSC). A foreign entrepreneur from almost any jurisdiction can incorporate a company in this hospitable southern state.

You can issue several types of shares for CJSCs in Turkey, namely:

• Common (ordinary) shares for a CJSC in Turkey give the right to vote in the JSC and receive dividends
• Registered shares are the securities on which the owner’s name is indicated (along with a record in the registration book), including in the case when securities are sold to another owner
• CJSC bearer shares in Turkey are the securities that can be sold and transferred. The distinctive feature of bearer shares in Turkey is that the information about the owner is confidential, which ensures the maximum anonymity for the beneficiary. 

Mind that registration of bearer shares of Turkish companies is carried out in the HPKS Central Registrar System, which is a mandatory requirement from 2021!

New Rules for the Transfer and Storage of Bearer Shares in Turkey in 2022

On 31 December 2020, amendments to the Turkish Laws on Bearer Shares, their transfer and holding were published in the Official Gazette:

• In accordance with the current legislation, you have to notify the Central Registrar (HPKS) on the issuance and transfer of written bearer shares in Closed Joint-Stock Companies starting from April 1, 2021.
• The information on the company’s ownership interests, including bearer shares without a name, is registered in the HPKS system and is treated as confidential. The data is disclosed only to the authorized bodies.
• The written notes (Share Certificates) may be transferred to the bearer in Turkey only after prior notification of the Central Registrar about the transfer of ownership.
• All CJSCs and shareholders were obliged to submit the data on bearer shares issued before the adoption of the new legislation until December 31, 2021. 
• In absence of a notice, the bearer shares owner will not be able to exercise his rights related to the participation share arising from this law. 
• Failure to comply with the new rules in Turkey will result in an administrative fine, which will be imposed on CJSC Board of Directors (20,000 liras) and on the beneficial owner (5,000 liras).

Reference: the information on the issuance of bearer shares is transferred from CJSC to the Central Registrar where the company’s contact information is indicated, and the Share Certificate is assigned a unique number generated by the system. The holder’s name is NOT specified on the security.

Bearer Shares in Offshores and European Zone

The initiative of global regulators to combat corruption and money laundering affected offshore companies and shareholders. Beginning in 2000, some measures were introduced to tighten the requirements for the issuance of bearer shares and subsequently to ban them altogether. 

For example, the world’s offshore jurisdictions, such as Belize, the BVI, and Nevis, were the first to fall under the established framework. Bearer shares were withdrawn from free circulation and obligations to declare assets and indicate the owner’s name were imposed in the case of their issuance. 

Today, the wave of beneficial owners disclosure was picked up by other states (not always on their own free will), and the attractiveness of Closed Joint-Stock Companies with their privileges has lost its relevance. Switzerland, where anonymity was previously a key issue for foreign investors, has recently amended its legislation with regard to the partial cancellation of bearer shares. And we know that violation of the system integrity means that we can no longer talk about 100% anonymity.  

Issues related to business legalization and deoffshorization are of greatest concern to foreign investors. At the same time, Turkey is one of the few countries where the holders of bearer shares are not publicly disclosed, and the company registration is available to non-residents.

Turkish Law – Issuance of Bearer Shares and Banking 

Returning to world events, we would like to recall that many countries have revised their internal regulations regarding the anonymity of beneficiaries in recent years, imposing a ban on the issuance of bearer shares. 

The jurisdictions that seek to preserve sovereignty on this issue have introduced requirements to inform the company registrar about the owners. The latter, in turn, has the right to transmit information to the State Department. This scheme results in zero anonymity and disclosure of beneficiaries at the request of the regulator and inspection bodies.

In Turkey, similar requirements for the issuance of bearer shares apply in 2022, which implies the transfer of information on the issuance and transfer of securities to the HPKS Registrar. However, the data is kept out of the access of third parties and can be disclosed solely on the basis of a court decision or if the owner is suspected of illegal activities and money laundering.

The law on bearer shares is regulated by the Labor Code of Turkey (LCT), which allows their issuance simultaneously with registered ones and permits their coexistence within the same company (Art. 484 of the LCT) on the terms prescribed in the company’s Articles of Association.

CJSC in Turkey – Advantages of Company Registration

Investors can choose the option of registering a CJSC by issuing bearer shares in order to have a share in foreign business without disclosing information about their participation in a foreign company. According to this scheme, you can:

• manage your company remotely
• legally pay taxes and get profit from the business share
• have no claims from global and local regulators
• abide by the laws of your country

Company Registration and Issuance of Bearer Shares in Turkey – Step-by-Step Instruction

Even if you have a company in Turkey, the issuance of bearer shares is not a process that can be launched immediately. You have to observe some established rules, including the registration of a CJSC with the right to issue bearer shares, the formation of the company’s Articles of Association and the depositing of the authorized capital to the company’s account. 

How to Quickly Open a CJSC in Turkey with Bearer Shares on a Remote Basis

Standard registration of a CJSC in Turkey with the participation of our experts costs USD 3,600. Stages of a Closed Joint-Stock Company establishment in Turkey with the support of our specialists:

• notarization of the power of attorney for the Turkish agent who will represent the interests of the company owner and shareholders
• lease/purchase of an office for your company in Ankara or another Turkish city
• registration of a legal entity and formation of the company’s Articles of Association
• payment of a contribution to the antimonopoly authority of the state – 0.4% of the authorized capital
• registration of documents in the tax and social funds
• opening a bank account where the amount should equal at least ¼ of the authorized capital

In 2022, the minimum amount of authorized capital for a JSC in Turkey is 50,000 liras, and the minimum number of shareholders is 1 person. 

Issuance of Bearer Shares in Turkey

The company’s right to issue bearer share certificates must be set forth in the company’s constituent documents. According to Art. 487 of the LCT, this right is enshrined in the country’s legislation and concerns CJSCs registered in the territory of Turkey. The decision to issue such securities is made by the company’s board of directors.

The procedure for shares formation implies several steps:

• Registration of a CJSC whose articles of association stipulate the rules for the issuance of bearer shares.
• The decision of the JSC board of directors to start issuing bearer shares or convert registered securities into this category by setting their nominal value. If this decision is made for the first time and was not taken into account earlier in the company’s articles of association, the constituent documents must be amended within two days.
• The decision of the board of directors is published in the newspaper of the Turkish Chamber of Commerce.
• Bearer shares are registered in the HPKS Central System.
• Further, the decision of the Board of Directors on the printing of shares in the Commercial Register is published.
• Each Certificate is assigned a unique number.
• The shares are sent for printing.
• The final stage of the issuance of bearer shares in Turkey is the signing of the document.

Form of Holding Bearer Shares in a Turkish CJSC in 2022

The information to be provided on bearer shares issued in Turkey under the new rules:

• company trade name
• the amount of the company’s capital
• date of company establishment
• date of registration of the issued promissory note (certificate)
• the cost of the certificate
• number of shares in the note
• reference number

A written bearer share must be signed by at least two officials entitled to sign on behalf of the company to take effect (Art. 487 of the LCT).

Term of Company Incorporation in Turkey with Bearer Shares

The registration of a Closed Joint-Stock Company in Turkey takes from 3 to 7 days. At this stage, the founders need to be present in the country in person to sign the documents. This will take no more than 2 days, and the rest of the formalities will be done by the specialists of our portal.

After the company has been registered, you will have to wait for 15 days to amend the company’s articles of association and start the procedure for bearer shares issuance. The procedure will take from 10 to 15 business days in total.

Company Registration and Issuance of Bearer Shares in Turkey – Professional Assistance

The team of offshore professionals together with Turkish partners offers services for company registration in Turkey, bearer shares and business support. 

1. Write to us at info@offshore-pro.info to tell our experts that you want to register a joint-stock company with a permit to issue bearer shares in Turkey.
2. At the consultant’s request, provide a package of documents and the information about the business owner, directors and shareholders.
3. Pay for the company registration and share issuance services at the established rates – the total amount of services starts from 6500 USD, depending on the objectives set and the customer’s wishes.
4. Provide a notarized power of attorney for the Turkish partner that represents your interests in Turkey.
5. We will prepare all the necessary documents and invite you to receive them in Turkey.

If you have any questions, we are ready to answer them at any time.