Joint Ventures in Turkey: Corporate Structures, Governance, Competition Clearance, Taxation and Exit Strategies

Introduction

Joint ventures are widely used in Turkey for infrastructure projects, energy investments, construction, manufacturing, technology development, distribution arrangements and market-entry transactions. They allow two or more investors to combine capital, technical expertise, intellectual property, local market knowledge or commercial networks for a specific project or long-term business.

Turkish law does not regulate every joint venture through a single, separate statute. The legal framework depends on how the parties structure their cooperation. A joint venture may operate through a Turkish joint-stock or limited liability company, through an ordinary partnership without separate legal personality, or through a combination of corporate and contractual arrangements.

The choice of structure affects the parties’ liability, management rights, taxation, employment relationships, regulatory obligations and exit options. A joint venture agreement should therefore be prepared only after the commercial purpose, duration, funding requirements and risk allocation of the project have been clearly identified.

What Is a Joint Venture?

A joint venture is a commercial cooperation in which two or more independent parties combine resources to carry out a particular business or project.

The participants may contribute:

Cash or other financing;
Real estate, machinery or equipment;
Technical expertise;
Intellectual property;
Employees and management personnel;
Distribution networks;
Government licences;
Customer relationships;
Access to a particular market.

The joint venture may be established for a single project, such as the construction of a power plant, or for an indefinite period, such as the production and distribution of goods in Turkey.

The legal structure should reflect whether the parties intend to create an independent operating business or merely cooperate for a limited contract.

Principal Joint Venture Structures in Turkey

Joint ventures in Turkey are commonly established through either a corporate joint venture or a contractual joint venture.

Corporate Joint Venture

In a corporate joint venture, the parties establish or acquire shares in a separate Turkish company. The company ordinarily takes the form of a:

Joint-stock company; or
Limited liability company.

The joint venture company has its own legal personality, assets, employees, bank accounts, contracts and liabilities. The investors participate in the venture as shareholders, while the company conducts the business in its own name.

The Ministry of Trade recognises joint-stock and limited liability companies as the principal capital company forms used in Turkey. A joint-stock company is managed by a board of directors, while a limited company is managed by one or more managers. (Ticaret Bakanlığı)

A corporate joint venture is usually more appropriate where:

The business will operate on a long-term basis;
The venture will hire its own employees;
It will own substantial assets;
External financing will be required;
It will enter into contracts with multiple customers;
The parties want to limit their liability;
The business may later be sold to another investor.

The principal documents generally include the company’s articles of association and a shareholders’ agreement.

Contractual Joint Venture

A contractual joint venture does not necessarily involve the establishment of a separate company. The parties cooperate under a joint venture, consortium or ordinary partnership agreement.

Under Article 620 of the Turkish Code of Obligations, an ordinary partnership arises where two or more persons undertake to combine their labour or assets to achieve a common purpose. A cooperation structure that does not possess the distinctive characteristics of another legally regulated company type may be treated as an ordinary partnership. (Resmi Gazete)

An ordinary partnership does not possess separate legal personality. Consequently, assets may be held jointly by the partners, contracts may be signed by one or more partners, and liability toward third parties depends on the agreement and the manner in which the obligation was undertaken.

This structure may be appropriate where:

The cooperation concerns a single project;
The venture will exist for a limited period;
The participants do not need a separate corporate organisation;
The parties will perform different portions of a contract;
Establishing and maintaining a separate company is commercially unnecessary.

The absence of separate legal personality can nevertheless create difficulties concerning asset ownership, representation, taxation, liability and termination. The joint venture agreement must therefore regulate these issues in detail.

Joint-Stock Company or Limited Company?

The selection between a joint-stock company and a limited company depends on the proposed ownership and investment model.

Joint-stock company

A joint-stock company is often preferred for larger investments, foreign shareholders, institutional investors and projects that may later require external financing or a share sale.

It generally offers greater flexibility concerning:

Share classes;
Share certificates;
Transfer mechanisms;
Board representation;
Future investors;
Exit transactions;
Share pledges;
Capital market planning.

Management and representation are entrusted to the board of directors. Shareholders ordinarily bear liability only for the capital they have undertaken to contribute, subject to exceptional statutory liabilities.

Limited company

A limited company may be suitable for closely held joint ventures with a smaller number of participants and a relatively simple ownership structure.

The transfer of limited company shares is more formal. It generally requires a written transfer agreement with notarised signatures and, unless the articles provide otherwise, general assembly approval.

Limited company shareholders may also face personal responsibility for certain public receivables that cannot be collected from the company. This risk should be assessed before selecting the company form.

The Joint Venture Agreement

The joint venture agreement is the principal document governing the commercial relationship between the parties.

Even where a joint venture company is established, the articles of association alone are rarely sufficient. The articles establish the formal corporate structure, while the joint venture or shareholders’ agreement regulates the parties’ detailed commercial arrangements.

A well-drafted agreement should address at least:

Purpose and scope of the venture;
Contributions of each party;
Ownership percentages;
Management structure;
Voting rights;
Funding obligations;
Profit distribution;
Intellectual property;
Confidentiality;
Non-compete obligations;
Transfer restrictions;
Deadlock resolution;
Events of default;
Exit rights;
Termination;
Dispute resolution.

The agreement should be coordinated with the articles of association. A provision contained only in the private agreement may create contractual obligations between the parties without automatically producing the same corporate effect against the company or third parties.

Capital and Contributions

Each participant’s contribution should be clearly identified and valued.

Contributions may include cash, machinery, technology, licences, trademarks, land, know-how or services. The agreement should specify:

The value of each contribution;
When and how it will be transferred;
Whether ownership or only a right of use is granted;
Whether additional funding may be required;
The consequences of failing to make a contribution;
Whether contributions will be treated as capital or shareholder loans.

Where assets are contributed as capital to a Turkish company, corporate-law valuation and registration requirements may apply. Restrictions may also arise where the asset is pledged, attached or subject to third-party rights.

The parties should avoid relying on informal understandings about future contributions. Disputes frequently arise where one party provides cash while the other claims to have contributed know-how, market access or management support without an objective valuation.

Corporate Governance

Governance is one of the most important aspects of a joint venture.

The agreement should establish a management system that protects each investor while allowing the company to operate efficiently.

Board composition

The agreement may give each shareholder the right to nominate a particular number of directors or managers.

It should regulate:

Number of directors;
Nomination and replacement rights;
Appointment of the chairperson;
Meeting frequency;
Notice periods;
Quorum;
Voting thresholds;
Remote participation;
Observer rights;
Conflicts of interest.

A director nominated by a shareholder does not merely act as that shareholder’s representative. Directors must comply with their statutory duties toward the joint venture company.

Reserved matters

Certain important decisions may require the consent of both parties or a qualified majority.

Reserved matters commonly include:

Annual business plan and budget;
Capital increases;
Borrowing above an agreed threshold;
Granting guarantees;
Acquisition or disposal of material assets;
Entry into a new business;
Related-party transactions;
Appointment of senior management;
Material litigation settlements;
Intellectual property transfers;
Dividend distributions;
Merger, demerger or liquidation;
Sale of the joint venture.

Reserved matters should contain objective thresholds. Requiring unanimous consent for every operational decision may cause permanent deadlock.

Financing the Joint Venture

The agreement should explain how the joint venture will be financed during its establishment and operation.

Financing may be provided through:

Equity contributions;
Shareholder loans;
Bank loans;
Third-party investment;
Project finance;
Revenue generated by the venture.

The parties should determine whether they are required to provide additional funding and what happens if one participant refuses or is unable to do so.

Possible consequences include:

Dilution of the defaulting party;
Conversion of funding into debt;
Suspension of contractual rights;
Default interest;
Call options;
Compulsory share transfer;
Termination of the venture.

Any dilution or compulsory transfer mechanism must also comply with the mandatory corporate procedures applicable to the joint venture company.

Intellectual Property and Technology

Many joint ventures depend on technology, trademarks, software, manufacturing methods or confidential know-how contributed by one of the parties.

The agreement should distinguish between:

Intellectual property owned before the joint venture;
Intellectual property developed by the joint venture;
Intellectual property jointly developed by the participants;
Technology licensed to the joint venture.

The parties should determine:

Who owns existing technology;
Whether the joint venture receives an exclusive or non-exclusive licence;
Territory and duration of use;
Right to grant sublicences;
Ownership of improvements;
Use of intellectual property after termination;
Registration and enforcement costs;
Protection of trade secrets.

Failure to address post-termination use may leave the joint venture unable to continue operating or allow one party to use jointly developed technology without compensation.

Employees and Management Personnel

The joint venture may recruit its own employees or receive employees from its shareholders.

The parties should distinguish between:

Permanent employment by the joint venture;
Temporary secondment;
Service arrangements with a shareholder;
Transfer of an existing workplace or business unit.

If a workplace or part of a workplace is legally transferred to the joint venture, existing employment agreements may pass to the transferee with their rights and obligations under Article 6 of the Labour Law. (TBMM CDM)

Secondment arrangements should regulate salary, social security, supervision, confidentiality, intellectual property and return to the original employer.

The parties should also decide who has authority to appoint and dismiss senior management and whether key executives require shareholder approval.

Profit Distribution

The agreement should establish the commercial principles governing profit distribution.

The parties may agree that distributable profits will ordinarily be paid according to their ownership percentages. However, distributions remain subject to:

Statutory reserves;
Previous-year losses;
Solvency requirements;
Financing agreements;
Working-capital needs;
General assembly approval.

A joint venture should not be structured so that one party bears the majority of the funding risk while the other controls whether any profit is distributed.

The agreement may therefore contain a dividend policy, provided that mandatory corporate rules are respected.

Transfer Restrictions

The identity of the joint venture partner is often commercially essential. For this reason, unrestricted share transfers may be unacceptable.

Common restrictions include:

Lock-up periods;
Prohibition on transfers to competitors;
Consent requirements;
Right of first offer;
Right of first refusal;
Pre-emption rights;
Permitted transfers to group companies;
Restrictions on indirect changes of control.

The agreement should define “transfer” broadly enough to include a sale, gift, pledge, usufruct, merger or change of control over a corporate shareholder.

Where a transfer restriction is intended to have corporate effect, it should be reflected in the articles of association to the extent permitted by Turkish law.

Tag-Along and Drag-Along Rights

A tag-along right protects a minority investor where the majority shareholder sells its interest. It enables the minority investor to require the buyer to acquire its shares on the same terms.

A drag-along right allows a specified majority to require the remaining shareholders to participate in a sale of the entire company.

The agreement should specify:

Triggering ownership percentage;
Notice procedure;
Minimum price;
Payment conditions;
Warranties to be given;
Allocation of transaction costs;
Consequences of non-cooperation.

Drag-along rights should not expose a minority shareholder to liability exceeding the sale proceeds it receives, except for matters concerning title, authority, fraud or wilful misconduct.

Deadlock Resolution

Deadlock is particularly common in ventures owned equally by two investors.

A deadlock may arise where the shareholders cannot approve:

The annual budget;
Additional financing;
Appointment of management;
A major investment;
Business strategy;
Sale of material assets.

The agreement should first define what constitutes a deadlock. Ordinary disagreements should not automatically trigger a forced exit.

A multi-stage mechanism may include:

Negotiation between operational representatives;
Referral to senior executives;
Mediation;
Independent expert determination;
Buy-sell procedure;
Sale of the joint venture;
Liquidation as a final remedy.

Buy-sell mechanisms such as Russian roulette or sealed-bid procedures may resolve deadlock, but they can favour the financially stronger participant. Valuation, payment security and financing periods should therefore be carefully regulated.

Events of Default

The agreement should identify serious breaches that permit the non-defaulting party to exercise special rights.

Events of default may include:

Failure to provide agreed funding;
Material breach of confidentiality;
Unauthorised share transfer;
Insolvency;
Regulatory violation;
Fraud or corruption;
Loss of a required licence;
Breach of non-compete obligations;
Persistent failure to attend corporate meetings.

Possible remedies include damages, contractual penalties, suspension of contractual rights, call options or compulsory transfer.

Automatic forfeiture of shares or disproportionately low transfer prices may create enforceability issues. Remedies should remain proportionate to the breach.

Competition Law and Merger Control

The establishment of a joint venture may require approval from the Turkish Competition Authority.

A joint venture may constitute a notifiable concentration where it creates a permanent change of control, is jointly controlled by two or more parent undertakings and performs all the functions of an independent economic entity on a lasting basis. Joint control may exist even without equal shareholding where shareholders possess veto rights over strategic commercial decisions. (Rekabet Kurumu)

In February 2026, Turkey’s merger-control thresholds were increased. The relevant individual Turkish turnover threshold was raised to TRY 1 billion, the combined Turkish turnover threshold to TRY 3 billion and the worldwide turnover threshold to TRY 9 billion. Special rules continue to apply to certain technology undertakings. (Rekabet Kurumu)

The 2026 amendments also introduced a more explicit framework for assessing whether the joint venture may facilitate coordination between its parent undertakings. Updated Competition Authority guidelines address joint control, full functionality and coordination risks. (Rekabet Kurumu)

Where notification is required, the parties should not implement the joint venture before Competition Board clearance.

Even if the joint venture is not a notifiable concentration, cooperation between competitors may still require assessment under the rules prohibiting anti-competitive agreements. Information exchange, market allocation, pricing and coordination outside the legitimate scope of the venture present particular risks.

Taxation of Joint Ventures

The tax treatment depends on the structure selected.

A joint venture company established as a joint-stock or limited company is generally taxed as a separate corporate taxpayer.

An ordinary partnership does not have separate legal personality and is not itself an income or corporate tax taxpayer. Its profit or loss is generally allocated to the partners according to their shares. However, separate obligations may arise for value-added tax, withholding tax, record keeping and invoicing. (Gelir İdaresi Başkanlığı)

A qualifying business partnership may elect to be treated as a corporate taxpayer where the statutory conditions are met. These conditions include establishment through a written agreement for a specific project, joint responsibility for the entire work and participation of at least one corporate taxpayer. (Gelir İdaresi Başkanlığı)

The joint venture agreement should allocate responsibility for:

Corporate tax;
VAT;
Withholding obligations;
Transfer pricing;
Related-party transactions;
Customs duties;
Tax inspections;
Historical liabilities;
Tax indemnities.

Cross-border shareholder loans, licence fees, management charges and dividend payments should also be reviewed under domestic tax rules and applicable double-tax treaties.

Foreign Investors

Foreign investors may participate in Turkish joint ventures through a Turkish company or a contractual structure. The parties should nevertheless review sector-specific ownership and approval requirements.

Regulated activities may include:

Banking and insurance;
Payment services;
Energy;
Telecommunications;
Media;
Aviation;
Defence;
Education;
Healthcare;
Capital markets.

Foreign corporate documents may require apostille or legalisation, sworn translation, Turkish tax identification numbers and disclosure of ultimate beneficial ownership.

The transaction should also include anti-money-laundering, sanctions and source-of-funds checks.

Regulatory Licences and Contracts

The joint venture must identify all licences and permits required to operate.

A licence held by one shareholder may not automatically be transferable to the joint venture company. Sector regulators may require a new application, prior approval or notification.

Material customer, supplier and financing contracts should be reviewed for:

Assignment restrictions;
Change-of-control clauses;
Exclusivity;
Minimum purchase commitments;
Non-compete obligations;
Termination rights;
Security requirements.

The joint venture should not begin operations before confirming that it has the necessary contractual and regulatory authority.

Dispute Resolution

The agreement should determine whether disputes will be resolved before Turkish courts or through arbitration.

International joint ventures frequently prefer arbitration because of confidentiality and the ability to select arbitrators with relevant commercial experience.

The clause should specify:

Governing law;
Arbitral institution or ad hoc rules;
Seat of arbitration;
Number of arbitrators;
Language;
Interim relief;
Confidentiality;
Enforcement procedure.

Corporate actions that require trade registry changes or directly affect third parties may still require proceedings before Turkish courts. Contractual and corporate remedies should therefore be coordinated.

Termination and Exit

The agreement should explain how the venture may end.

Termination events may include:

Expiry of the agreed term;
Completion of the project;
Material breach;
Insolvency;
Regulatory prohibition;
Prolonged deadlock;
Loss of essential licences;
Change of control;
Sale of the venture.

The parties should determine whether termination results in:

Sale of one party’s shares;
Sale of the entire business;
Transfer of assets;
Liquidation;
Return of licensed intellectual property;
Completion of existing contracts.

Post-termination provisions should address confidentiality, non-compete obligations, employee arrangements, customer contracts, outstanding liabilities and ownership of records.

Practical Joint Venture Checklist

Before establishing a joint venture in Turkey, the parties should:

Define the business purpose and duration.
Select a corporate or contractual structure.
Conduct legal, financial and tax due diligence.
Identify each party’s contribution.
Establish governance and reserved matters.
Agree on initial and future financing.
Regulate intellectual property and confidentiality.
Determine employee and management arrangements.
Include transfer restrictions and exit rights.
Establish a workable deadlock mechanism.
Review tax and transfer-pricing consequences.
Assess Competition Authority notification.
Obtain sector-specific permissions.
Review material contracts and licences.
Establish dispute resolution and termination procedures.

Conclusion

Joint ventures provide an effective structure for combining local knowledge, capital, technology and operational expertise in Turkey. Their success depends less on the name given to the arrangement than on the clarity of the underlying legal structure.

A corporate joint venture may provide limited liability, legal personality and a more suitable platform for long-term operations. A contractual joint venture may offer flexibility for a single project but requires careful regulation of representation, liability, taxation and asset ownership.

The joint venture agreement should anticipate not only how the parties will cooperate while the business is successful, but also how funding disputes, management disagreements, regulatory problems and exit events will be handled. Governance, competition clearance, tax structure, intellectual property and deadlock mechanisms should therefore be analysed before the joint venture begins operating.

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