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Foreign Capital Framework Decree

Source: Undersecretariat of Treasury; Official Gazette - Jul 23rd, 1995 - No: 22352 Law No: 6990; Approved: 7 June 1995; Issued: 23 July 1995

Objective    Definitions    General Principles    Foreign Personnel Employment    Transfers  Blockage of Foreign Partners' Capital Share   Equality Principle     Authorised Agency    Other Principles

Objective Article 1- The purpose of this Decree is to establish the principles of promoting foreign capital which will flow into Turkey within the framework of the Foreign Capital Encouragement Law (No: 6224), the protection of the Value of the Turkish Currency Law (No: 1567) and the Law concerning the Organisation and Functions of Undersecretariat of Treasury and Undersecretariat of Foreign Trade. (No: 4059)

Definitions Article 2- In the implementation of this Decree, the terms used have the following meanings: a) Undersecretariat: Undersecretariat of Treasury b) Real and legal persons resident abroad: Real persons who are citizens of foreign countries and legal persons that are formed in these countries. c) Foreign capital: Capital in cash in the form of convertible or effective foreign currency bought and sold by Central Bank of Turkey. The assets defined in Article 5 of this Decree. Machinery, equipment, tools and similar goods, machinery parts, materials and other necessary goods approved by Undersecretariat. Assets and receivable of foreign nationals under Foreign Exchange Legislation if these are accepted as share in capital by Undersecretariat. Intellectual property such as patent rights and trade marks if accepted by Undersecretariat. Top

General Principles Article 3- Permissions concerning foreign capital are issued in accordance with the following principles. a) The applications of real and legal persons resident abroad about investing in Turkey, engaging in commercial activities, participating in partnerships, opening branch offices and establishing liaison offices are examined within the Legislation in effect by Undersecretariat. b) Undersecretariat is empowered to make amendments relating to issuance of permits for new investments and participation, capacity increase, liquidation and mergers, alterations in participation ratio for existing firms with foreign capital and also to make amendments on duration, quantity, export undertaking, field of activity, value and proportion of share. c) Real and legal persons resident abroad must bring a minimum 50.000.- USA Dollars per person to establish corporations, become partners in existing companies and opening branch offices. In the case of that the number of foreign shareholders is above one, the participation amounts of foreign partners in total capital can be arranged freely. d) Capital increase can be done without taking any permission if the participation ratios of foreign partners do not change. After making capital increase, the application is done to Undersecretariat for only registration. e) Real and legal persons resident abroad can buy or sell the shares of existing companies in Turkey in accordance with the principles defined by Undersecretariat. f) Undersecretariat can endorse a transfer guarantee on shares or temporary receipts which are registered in the name of foreign partners. g) License, know-how, technical assistance and management agreements concluded by Turkish public and private sector enterprises with real and/or legal persons resident abroad shall put into effect after registering these agreements to Undersecretariat. h) Establishments with foreign capital can assure every type of foreign credits freely. Top

Foreign Personnel Employment Article 4- The applications of private sector establishments about employing foreign personnel are evaluated within the Legislation Framework in effect and the principles defined by Undersecretariat.

Transfers Article 5- The transfer or reinvestment of profits, dividends, proceeds of sale and liquidation, compensation payments, payments under license, technical assistance agreements, repayments of foreign credit principal and interest, corresponding to the shares in foreign capital, within the framework of this Decree, is unrestricted. Transfers are realised through banks over the official exchange rate valid in the date of the transaction.

Blockage of Foreign Partners' Capital Share in Foreign Exchange Deposits Account Article 6- If demanded, it is not necessary to convert the foreign currency to Turkish Lira . In other words, the foreign exchanges (including effective ones) brought from abroad for the purpose of establishing corporations, increasing capital or buying the shares of existing Turkish companies can be blocked in Foreign Exchange Deposits Account opened on the behalf of the firm or the partner who sell his/her shares freely and can be considered as foreign partner capital share amount. However, when equivalent TL amount of foreign currency is registered as corporation capital, official foreign exchange bid rate in the date of the Letter of Blockage is used. Top

Equality Principle Article 7- With taking the permissions within the scope of Law No: 6224, the firms and branch offices established according to Turkish Commercial Code and registered to Turkish Trade Registry are considered as Turkish firms and branch offices. Top

Authorised Agency Article 8- Promotion relating with bringing foreign capital into Turkey, permission, registration, granting the incentives to investors, cancelling the permission certificates and registrations, within the framework of this Decree, are executed by General Directorate of Foreign Investment. Moreover, General Directorate of Foreign Investment organise and coordinate the Build-Operate-Transfer model to realise some or all of the investment and services which require high technology and/or financial resources through local and/or foreign establishments. Top

Other Principles Article 9- In the case of that the permissions are cancelled by Undersecretariat, the information is given to Ministry of Industry and Trade to make transaction according to Article 274 of Turkish Commercial Code. Article 10- 1 % of the previous year total subsidy amount of the Investments and Foreign Currency Earning Services Fund established according to the Law No: 2976 dated on Feb. 2, 1984 and to the Decree No: 88/13458 dated on Nov. 8, 1988 can be used for financing the promotion expenditures (including furniture purchases) of General Directorate of Foreign Investment and General Directorate of Incentive Implementation. Article 11- Paragraph 'f' in Article 15 of the Law concerning the Protection of the Value of the Turkish Currency (No: 89/14391 dated on August 7, 1989) is repealed. Article 12- Undersecretariat, if seen necessary, can request the information and documents from the establishments in Turkey about their activities. Article 13- The procedures and principles concerning the implementation of this Decree are determined by Communiques of Prime Ministry. Temporary Clause 1- In implementation of Article 10 of this Decree, the total subsidy amount of 1994 in the Investments and Foreign Currency Earning Services Fund is considered for 1995. Top



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