Corporate Tax Law Art. 2/7 (Joint Venture):
The institutions mentioned in the above paragraphs (capital companies, cooperatives, economic public institutions, economic enterprises belonging to associations and foundations) established among themselves or with sole proprietorships or real persons for the purpose of jointly undertaking a certain business and sharing its profits. Business partnerships are those who demand such liability from partnerships. Their lack of legal personality does not affect their obligations.
Definition:
A Joint Venture is an arrangement where economically and legally independent persons or organizations, with or without legal personality, with or without establishing a trading partnership, jointly undertake to carry out a single business or a continuous activity with the aim of earning a profit; and it is a contract for which they are jointly and severally responsible for the performance of the work.
Types of Joint Ventures
| Category | Sub-Category | Description / Examples |
|---|---|---|
| By Forms of Establishment | Contract-Based Joint Venture | Established solely by contract, without forming a separate legal entity |
| Joint Venture with Capital | Includes a capital contribution, often via an incorporated entity | |
| By the Nationality of the Parties | National Joint Venture | All partners are domestic (Turkish) entities or persons |
| International Joint Venture | At least one partner is a foreign entity or person | |
| By Subject of Commitment | Energy, Nuclear Power Plant, Telecommunication Investments | Projects in the energy sector, nuclear facilities, telecom infrastructure |
| Mining, Oil and Natural Gas Exploration and Extraction | Resource exploration and extraction activities | |
| Highway, Bridge, Tunnel, Dam, Port, Airport, Refinery, Pipeline etc. Build | Large-scale infrastructure projects | |
| Other Strategic and Large-Scale Investments and Projects | Significant projects of national or strategic importance | |
| By Activity | In the R&D Field Joint Venture | Collaboration in research and development |
| In the Field of Production Joint Venture | Partnership for manufacturing/production activities | |
| In the Field of Marketing Joint Venture | Cooperation focused on marketing and market penetration | |
| In the Field of Distribution Joint Venture | Joint operations for product or service distribution | |
| Contributions of Partners | Partner-1 | Money, Goods, Experience, Know-how, Personal reputation, Brand, Patent, Licensing etc. |
| Partner-2 | Money, Goods, Experience, Know-how, Personal reputation, Brand, Patent, Licensing etc. | |
| Partner-3 | Money, Goods, Experience, Know-how, Personal reputation, Brand, Patent, Licensing etc. | |
| Partner-4 | Money, Goods, Experience, Know-how, Personal reputation, Brand, Patent, Licensing etc. |
Traditional (Contractual) Joint Venture
Particulars:
Established with the conclusion of the contract by the parties
A joint venture must have a profit motive
No commercial partnership is formed
Partners are jointly and severally liable for the entire work (directly and unlimitedly responsible with all assets; each party is responsible for the entire business, not only a part)
No capital requirement
Depending on the type, there may be a need for organization or it may operate without establishing one
The Joint Venture Contract Contains:
The purpose of establishment
Activity area
Management and representation
Rights and obligations of the parties, cooperation relationship between the parties
Equity (Capital-Involved) Joint Venture
Multiple individuals and organizations form a partnership to achieve a common goal
The partnership may or may not have legal personality
Preferred to ensure permanent and institutional cooperation between parties, though it may also be used for temporary economic activities
Only economically and legally independent persons/organizations can establish a Joint Venture with Capital Participation
The partnership is under the joint control of the contracting parties
Legal Structure and Contracts
Basic Joint Venture Agreement – establishes the relationship and functions as an ordinary partnership contract
Articles of Association – of the commercial company decided to be established under the basic contract, responsible for carrying out joint venture activities
Satellite Contracts – regulate relations between partners and the partnership, defining contributions and responsibilities in various aspects of joint venture activities
Topics Arranged in the Joint Venture Agreement (Basic Agreement)
Purpose of the cooperation between the parties
Field of activity
Type of partnership
Center of the partnership
Capital of the partnership
Participation rates and method of contribution to the capital; guarantees and credit supply
Management, meeting and decision quorum
Representation of the partnership
Rights and liabilities of the parties
Transfer of partnership shares
Legal and economic relations between the parties
Profit distribution
Applicable law and dispute resolution (competent courts or arbitration)
Duration of the joint venture contract
Reasons for termination of the agreement