In Turkish economy, the rate of capital flow has changed in last three years and this means that more foreign investors are expected to become ownerships of the companies in Turkey. The foreign investors could be owners of the companies in Turkey, wholly or part in. Therefore, lawmaker has specified the details of the fundamental principles related Foreign Direct Invesment (“FDI”) which is interested particularly from foreign investors. The legal system of the FDI is restricted by law numbered 4875 and dated 17.06.2003. FDI Law includes 7 articles which makes the framework of FDI clear to foreign investors (please see our related article-FDI). In this manner, the fundamental principles which foreign investors shall be subject to, are regulated under the title of “Principles Regarding Foreign Direct İnvesments” in article 3 of Law no.4875.
Essentially, the freedom of invesment and principles of equal treatment are regulated into sub-paragraph (a) of Article 3. According to sub-paragraph, unless stipulated by international agreements and provisions of specific codes, foreign investors are free to make FDI in Turkey. The second part of the sub-paragraph is stated about equal treatment. In this way, the article indicates that foreign investors shall be subject to equal treatment with domestic investors.
As stated in sub-paragraph (b) of Article 3, foreign direct invesments shall not be expropriated or nationalised, except for a public purpose and upon compensation in accordance with due process of law. Even though the restriction about expropriation and nationalisation is specifically regulated in this article 3, The Turkish Constitution Article 46 (expropriation) and 47 (nationalization and privatization) are general principles of law in Turkey for expropriation and nationalisation. Moreover the Turkish Constitution Article 46, expropriation of privately owned real estate wholly or in part in accordance with the principles and procedures prescribed by the Code of Expropriation numbered 2942 dated of 4.11.1983, where the public interest requires and the actual compensation is paid in advance. The other article 47 of Turkish Constitution stated that private enterprises performing public services may be nationalized when this is required by public interest.
Furthermore, the principle of free transfer is stated in sub-paragraph (c) of Article 3 of Law no.4875. Under the FDI Law foreign investors have freedom to transfer. The article indicated that, ”Foreign investors can freely transfer abroad: profits, dividends, proceeds from the sale or liquidation of all or any part of an investment, compensation payments, amounts arising from license, management and similar agreements, and reimbursements and interest payments arising from foreign loans through banks or special financial institutions.”
Please our related articles;
Definition Of Foreign Direct Investment And Foreign Investor In Turkish Law
The Valuation Of Non-Cash Capital In Turkish Law
The Acquisition Of Real Property And Limited Rights In Rem By Companies
Determination Of Policies And Data Collection In Foreign Direct Investment In Turkey
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