• New Regulation on Liaison Office Implementations
  • August 22, 2012
  • Law Firm: HERDEM&Co. Attorneys At Law - Istanbul Office
  • A new regulation published on 03 July 2012 dated, 28342 numbered Official Gazette amending the Regulation for Implementation of Foreign Direct Investment Law.

    By thus, liaison offices are subject to new regulations both in in permission and operation proceedings.

    According to the article 6 of the new Regulation, Ministry of Economy is authorized to give permissions as the governmental body.

    The Ministry of Economy is authorized to give permission to open a liaison office and to extend the duration of these permits to foreign companies established under the laws of the country, provided they have no commercial activities in Turkey.

    The Ministry has also right to determine the applications of new formed companies in frame of the company's capital, activity and number of staff employed and may stipulate to pass one year from the formation of the company.

    Applications for the opening of liaison office and extension of the operation shall be finalized within 15 days provided that the requested information and documents are full and complete.

    Foreign companies running business in money and capital markets, insurance-based financial areas that have special rules and requirements for opening liaison office are subject to permissions of relevant authorities.

    The first period of operating liaison office is limited for a period of three years.  Companies wish to extend their license shall apply to the General Directorate before the expiration of the period.

    Companies have liaison office for market research or to promote the products or services are not allowed to extend their operating licenses.

    The extension periods are also defined in the Regulation as follows;

     i)         Representation businesses; that are related with sectoral organizations to be represented before the foreign company, coordination and organization of business contacts in Turkey, officials the extension is allowed up to 5 years.

    ii)         Supplier control in Turkey in terms of quality and standards control the extension is allowed up to 5 years.

    iii)         Technical support (Training or providing technical support for distributors, suppliers, manufacturers provide support services to enhance quality standards) the extension is allowed up to 5 years.

    iv)        Communication and information transfer (To be delivered to foreign companies located in a business relationship with Turkey on the market developments, consumer trends, competitors and distributors selling situations, distributor firms' performance, and so on. Issues relating to the collection and transfer of information) the extension is allowed up to 5 years.

    v)         Regional management center (Foreign company, units in other countries will be developed for investment and management strategies, planning, promotion, sales, after sales services, brand management, financial management, technical support, R & D, foreign procurement, testing of newly developed products, laboratory services , research and analysis, employee training and management services, such as ensuring the coordination of activities) the extension is allowed up to 10 years.

    The permission for establishment of the liaison offices, tax offices and the office of the registration certificate of the rental agreement shall be submitted to the Directorate General of Foreign Investment Promotion and Implementation within one month at the latest.

    Liaison offices perform their activities according to regulations and as the subject of activity specified in permits, written notices on its own initiative or on the relevant organization and institution inspected by the Ministry. As a result of the audit, in case where it is identified that the offices in which they operate outside the scope of permission, may apply for permission within thirty days in order to operate effectively. This period may be extended for thirty days at most if there are justifiable reasons. Operating permit shall be cancelled if relevant liaison office does not apply within the given period.