Acquisition of immovable by foreign capital companies
Pursuant to the Law No. 5782 amending the Land Registry Law No. 2644, foreign real persons may acquire, with respect to provincial districts, at most 10% of the total area remaining within the scope of implemented development plans or local development plans.
The Council of Ministers is authorized to determine the area ratio of the immovable properties which are not allowed to be purchased by real persons and legal entities (by considering the request for acquisition of immovable and limited rights in-rem in irrigation, energy, agricultural, mining regions, green areas, and other areas requiring protection due to their religious and cultural values; special protection areas and in the sensitive zones such as floras and faunas and other locations which are deemed strategically important from the aspect of public interest and state security).
However, a regulation was circulated prescribing the procedures and principles relating to the acquisition of immovable and limited rights in-rem by the legal entity companies incorporated or participated in Turkey by foreign investors.
The Regulation relating to Acquisition of Immovable by Companies with Foreign Capital, published in the Official Gazette dated 12.11.2008 and No. 27,052 is issued on the basis of Article 36/4 of Land Registry Law No 2644.
Pursuant to this regulation, the companies willing to acquire immovable and/or limited rights in-rem in Turkey shall apply to the Provincial Planning and Coordination Directorate (Prefecture Office) at the location of the immovable by presenting the required documents.
Upon the application, the Prefecture Office shall request the Provincial Directorate of Industry and Commerce in writing to notify within seven days whether the application for acquisition of immovable is consistent with the company’s field of activity defined in its articles of association, and the General Staff or an authorized sub-command to inform within thirty days whether the immovable remains within a restricted military zone, military security zone or a militarily strategic region, and if so, whether the acquisition of immovable ownership is approvable or not; also, relevant law enforcement agency or General Directorate of Security is sought to report within twenty days whether the immovable is located in the special security zone or not.
According to the rules set forth in the said regulation:
- The request for acquisition of ownership of an immovable remaining outside the restricted military zone, military security zone or a militarily strategic region is finalized by the Prefecture Office within the frame of the opinion conveyed by the Provincial Directorate of Industry of Commerce on the company’s field of activity defined in its articles of association.
- In case the immovable is located in the restricted military zone, military security or strategic region, the General Staff assesses the request for the acquisition of immovable from the aspect of state security and notifies the Prefecture Office.
- If an affirmative decision is taken, then Prefecture Office finalizes the request within the frame of the opinion of the Provincial Directorate of Industry and Commerce confirming compliance of the request for acquisition of immovable with the company’s field of activity defined in its articles of association.
- In case the immovable is located in special security region, it is the duty of the commission to be formed within the body of the Prefecture Office to assess the request for acquisition of immovable from the aspects of state security and company’s field of activity defined in its articles of association and to decide by referring to the written comments of the relevant institutions and state bodies. The unanimous approval of the permanent commission members is required for the acquisition of the immovable.
- In the application for acquisition of limited rights in-rem, the Prefecture Office requests the Provincial Directorate of Industry and Commerce in writing to notify within seven days whether the application is consistent with the company’s field of activity defined in its articles of association, and finalizes the application within the frame of the comments received from the relevant authorities.
- In case a company with domestic capital becomes a foreign invested company through a share transfer, the Turkish Treasury is required to be notified. The Turkish Treasury informs the General Directorate of Land Registry and Cadastre monthly on this kind of capital transformations. The General Directorate of Land Registry and Cadastre notifies the Prefecture Office as to the immovable owned by the company. Then Prefecture Office shall request the Provincial Directorate of Industry and Commerce in writing to notify within seven days whether the application for acquisition of immovable is consistent with the company’s field of activity defined in its articles of association, and the General Staff or its authorized sub-commands to inform within thirty days whether the immovable remains within the restricted military zone, military security zone or militarily strategic regions, and if so, whether the acquisition of immovable ownership is approvable or not; also, the relevant law enforcement agency or General Directorate of Security is sought to report within twenty days whether the immovable is located in the special security zone or not.
- If the shareholding structure changes, in other words, if an incoming foreign partner participates in the foreign invested company, the same principles and procedures with the above mentioned situation are applied. However, in case of a change in the shareholding structure, the Prefecture Office does not investigate whether the application for acquisition of immovable is consistent with the company’s field of activity defined in its articles of association or not.
The commission to be formed within the body of the Prefecture Office may file a legal action against the decision unanimously rendered for the acquisition of immovable by relying on Article 125 of the Constitutional Law stipulating “Any person may pursue a judicial action against any and all actions and transactions of the Administration”. In actions to be filed against the transactions executed by the Administration, the prescribed period starts to run as of the date of the written notification.
There is no difference between the applications of immovable acquisition and limited right in-rem application process except the required term from the authorities giving their opinions. Each process requires the positive opinion of the relevant authorities, such as Turkish General Staff regarding the country security. Therefore, when the process is considered in terms of time limitations, acquisition of limited rights in-rem is more convenient and practical.
Additionally, it is important to note that, except in military zones, acquisition of an immovable will not take a long and is not a bureaucratically complicated process.
The subject whether the acquired immovable or limited rights in-rem are used or not used to serve the object defined in the company’s articles of association is assessed by the relevant commission. The assessment period starts ex officio or upon the written application of real persons or legal entities. In case the assessment is resulted negatively, the commission notifies the Prefecture Office in order to provide enforcement of the relevant clause of the regulation relating to liquidation of the immovable. If the immovable and the limited rights in-rem are determined to have been acquired or used contrary to this clause and if the liquidation of the immovable not completed by the owner within the period granted by the Ministry of Finance, then foreclosure proceedings are applied and the proceeds are paid to the beneficiary.
