Can a non-Turkish national become a director of a Turkish company? Of course. However, there are several obstacles when doing this and several consequences if things go wrong. I have been asked this same question time and again: “I have been informed that only Turkish citizens can become directors of Turkish companies. Is this correct?”
It is not true that only Turkish citizens can become directors of limited companies. The generally applicable rule is that a foreigner can run many types of businesses and engage in many professions in Turkey. There are only a few job limitations for foreigners living in Turkey. A foreigner can become a director of a limited company, though I must note that he or she should have a work permit to do so.
Limited companies
Limited companies are the most common form of company in Turkey. There are two major reasons that make limited liability companies (LLCs) more popular.
The number of shareholders. You need only two shareholders to form an LLC whereas you need five shareholders to form a joint stock company (société anonyme).
The minimum required capital. The minimum required capital for establishing an LLC is TL 5,000, whereas you need to invest a minimum of TL 50,000 to form a joint stock company.
Director(s)
An LLC is run by one or more director(s) appointed by the shareholders. It is a major disadvantage if the company is run by one director with the sole power to represent the company.
It is very important to know who the director is if you have only one director and if his powers are not limited. I strongly recommend that you limit the powers of the director by employing certain methods when establishing the company. Otherwise, you may end up struggling with problems arising out of valid and binding contracts made by the sole director. A major disadvantage for a two-shareholder limited company is that the operation of the company can be easily blocked by one of the partners. I would say that a limited company is likely to be suitable for running a family business, where the parties know each other very well and act in accordance.
Liability risks of directors under Turkish law
What are the liability risks of company directors? There are several duties, responsibilities and liability risks for company directors under Turkish law. Today I will only focus on financial liability risks of directors and underline one single point. A director of a Turkish LLC has unlimited liability for the company's public debts with his personal assets. In other words, if a Turkish company is under a tax liability and fails to pay, then the tax office shall seek the money from the company director first. The director will be under the burden of paying the tax himself with his personal money or assets. Harsh, isn't it?
