WORK PERMITS OF FOREIGN SHAREHOLDERS & KEY PERSONNEL

The rules and principles stipulated in the Law on Work Permits of Foreigners (Law no:4817) are applicable to the foreigners working dependently or independently in Turkey.  The notion of ‘Dependent Worker’ is defined, under article 3 of the Law no: 4817, as the ‘foreigner who works against wage, salary, commission, etc. at the disposal of one or more employer that has a real or judicial identity’. On the other hand, by the virtue of the same article, a ‘foreigner works for and on the account of himself/herself, whether he/she employs other persons or not’ is considered as working independently.

In accordance with this legal base, a foreigner shareholder of a private company established in Turkey might be required to obtain work permit. Being solely a shareholder or a board member does not grant a working permission in Turkey. Work permit requirement of the foreigner shareholder is not dependent on the business structure. Whether it is a joint stock company (A.Ş.) or a limited liability company (Ltd. Şti.) or other types of businesses described under relevant Turkish legislation, in order to take active part in the operation of company, foreigner shareholders might be required to obtain work permit. However, work permit application procedure is slightly different between those companies with foreign capital and the companies classified as foreign direct investment.

WORK PERMITS UNDER THE SCOPE OF FOREIGN DIRECT INVESTMENT LAW

Principles concerning Foreign Direct Investment are specifically regulated by Law no: 4875 on Foreign Direct Investment[1] and Regulation on the implementation of Foreign Direct Investment Law[2]. Article 1 of the Law no 4875 defines the aim of the Foreign Direct Investment Law as;

“The objective of this Law is to regulate the principles 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 to increase foreign direct investments through established policies. This Law establishes the treatment to be applied to foreign direct investments.”

In line with incentives for the encouragement of Foreign Direct Investments, among some other polices and principles, employment of foreign employees in FDIs, regulated by a special regulation. Regulation on the Employment of Foreign Personnel in Foreign Direct Investment[3] (hereinafter Regulation) regulates the procedures and principles regarding to the work permissions of foreign personnel employed in FDIs. However in accordance with article 2 of the Regulation, these procedures and principles only apply to the ‘Key Personnel’ employed in the FDIs. As per article 4 of the Regulation, Key Personnel should posses one of the following features.

“a) (1) Working in the company’s senior management or executive position, (2) Managing the entire or a part of the company, (3) Supervising or checking the works of the company’s auditors, administrative or technical personnel, (4) Taking new personnel to the company or terminating the employment of those existing or making suggestions in this subjects;

any person in charge of at least one of the above fields or authorized in these matters; acting in the position of the company’s associate, chairman of the board of directors, member of the board of directors, general manager, general manager associate, company manager, company manager associate and similar positions.

b) Any person featuring the knowledge considered essential for the company’s services, research devices, techniques or methods,

c) Maximum one person in the liaison offices, who has been issued a letter of authorization by the principal company abroad.”

As per article 4 of the Regulation, a company with foreign capital, in order to be classified as special FDI, should satisfy at least one of the following conditions; (2013)

“a) the fact that the company’s or branch’s last annual turnover amounts to at least 79,8 Million  Turkish Lira, under the condition that the total capital share of the foreign shareholders amounts to at least 1.062.691 Turkish Lira,

b) the fact that the company’s or branch’s last annual exports amount to at least 1 million US Dollars, under the condition that the total capital share of the foreign shareholders amounts to at least 1.062.691  Turkish Lira,

 c) the fact that at least 250 registered personnel are employed with the company or branch within the last year, under the condition that the total capital share of the foreign shareholders amounts to at least 1.062.691  Turkish Lira,

 d) that in case the company or branch shall realize an investment, the minimum fixed investment amount foreseen shall be at least 26,6 Million Turkish Lira,

e) the fact that the principal company features any direct foreign investment in at least one more country apart from the country where its head offices are situated.”

WORK PERMIT APPLICATIONS

Work permit applications for key personnel to be employed in special  FDIs, cannot be rejected on the basis of article 14 (b) of the Law on Work Permits of Foreigners. Article 14 (b) provides Ministry of Labor and Social Security with the right to reject work permit applications on the basis of availability of a person within four weeks in the country with the same quality to perform the applied job. Applications for Work Permit can be made through Turkish representatives abroad. In the existence of residence permit valid for at least 6 months, foreigners residing in Turkey can make their applications directly to Ministry of Labor and Social Security. In the case of employment field of key personnel is irrelevant from their vocational education, Ministry do not seek any advisory opinion about the professional efficiency from relevant authorizes. Those Key Personnel are not subject to assessment procedures related to their academic and professional qualifications. In addition to the ordinary required documents for the work permit applications, in the work permit applications for key personnel, documents verifying company or branch is a “special foreign direct investment” as well as documents evidencing the foreign personnel is key personnel are necessarily should be submitted to the Ministry.   An application that is ‘duly made’ normally assessed and determined within 15 days after the day of submission of required documents to the Ministry. 15 days period may be extended for the applications of key personnel who will work within the scope of professional services.

EMPLOYMENT OF FOREIGNERS IN LIAISON OFFICES

As per article 3 (h) of the Law no 4875 on Foreign Direct Investment and article 6 of the regulation on the implementation of Foreign Direct Investment Law, “The Ministry (Ministry of Economy) is authorized to grant permits and extend such permits to companies established in accordance with the laws of foreign countries to open liaison offices in Turkey, provided that they do not carry out commercial activities in Turkey.

Within this respect, in accordance with article 4 (c) of the regulation, maximum one person in the liaison offices, who has been issued a letter of authorization by the principal company abroad, is considered as Key Personnel, under the condition that the office has brought at least 200.000 US Dollars or its equivalent in foreign currency from abroad within the last year for its activities.

For the employment of key personnel in the liaison offices (maximum one person who holds authorization letter), foreign labor quota system will not be applied  Turkish foreign labor quota system prescribes that, for every individual work permit requests, company should have at least 5 full-time Turkish employees within its workplace. However for additional foreigners to be employed in the liaison offices, foreign labor quota will be still applicable.

WORK PERMITS OF FOREIGN SHAREHOLDERS

Work permits regime for the foreigners within those companies with foreign capital which are not considered within the scope of Law no: 4875 on Foreign Direct Investment is regulated by the Law no: 4817 on Work Permits of Foreigners.  

Only being a capital shareholder without having authority related to the management and representation of company cannot be considered as “work” for the purpose of Law no: 4817 on the Work Permits of Foreigners.  However foreign shareholders who are taking active part in the operation of company are required to obtain work permit. In order to make a work permit application as foreign shareholder, in addition to the other eligibility criteria should be satisfied by the employers, capital share of the foreign shareholder, on the condition of not being less than 20 percent of total capital, required to be at least 40.000 Turkish Lira.

In foreign shareholder work permit application, foreign labor quota system[4] will be applied in the last six months of the granted one year work permit. Thus foreign shareholders are not required to verify that they have at least 5 full-time Turkish employees within their workplace during their initial applications.

[1] Law No. 4875,  Date of Enactment: 5.6.2003 (Published in the Official Gazette 0n 17 June 2003, No. 25141)

[2] Regulation on the implementation of Foreign Direct Investment Law (Published in the Official Gazette 0n 20 August 2003, No. 25205)

[3] Regulation on the Employment of Foreign Personnel in Foreign Direct Investment (Published in the Official Gazette 0n 29 August 2003, No. 25214)

[4] Turkish foreign labor quota system prescribes that, for every individual work permit requests, company should have at least 5 full-time Turkish employees within its workplace.

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