Foundations are permanent institutions established by a person or persons to serve a specific purpose and are called ‘foundations’. Foundations are property communities with private law legal personality established for a specific social, religious, cultural, educational or charitable purpose. Real or legal persons dedicate certain property and rights in order to fulfill these purposes.
Foundations can be established by natural or legal persons. If the founder is a real person, he/she must have the capacity to act as defined in the Turkish Civil Code. The legal person, on the other hand, must have the capacity to act, but there must be a provision in the foundation statute stipulating that it can establish a foundation and allocate assets to the foundation.
Turkish Civil Code No. 4721 contains some provisions regarding foundations. For example, information such as how to open a foundation, how it will be audited, its content, and its registration are included in the relevant law.
The will to establish a foundation, which is a unilateral legal transaction, can be expressed in 2 different ways.
- Official deed (foundation deed)
- Savings on death
Let us explain these two forms of acquisition separately.
Establishment Of A Foundation With An Official Deed
The establishment of a foundation with an official deed is realized with the declaration of the will together with the deed prepared by a notary public. Real or legal persons may establish a foundation in this way. Real persons must have the capacity to act in order to express this will.
A copy of the document issued by the notary in accordance with the elements required in the foundation deed is sent by the notary to the General Directorate of Foundations within seven days from the date of issue.
The person who wishes to establish a foundation must submit a registration request to the competent court within 3 months following the issuance of the foundation deed by the notary public. The competent and authorized court in this regard is the Civil Court of First Instance in the place of residence. In case of registration in the foundation registry kept by the court, the foundation will gain legal personality.
If a registration request is not made within 3 months, an application is made by the General Directorate of Foundations. Upon application to the competent court, the expenses to be incurred shall be covered by the General Directorate of Foundations, provided that they are collected from the relevant foundation.
It is also possible to establish a foundation with an official deed through a representative. It is obligatory that the representative authorization must be granted with a certificate of representation issued by a notary public, and the purpose of the foundation and the property and rights to be endowed must be determined in this document. If there is a legal entity among the founders, they must submit the foundation statute or the decision of the authorized body, which includes a provision stating that this legal entity may establish a foundation and allocate assets to the foundation, to the court with the foundation deed.
Establishment Of A Foundation Through Testamentary Disposition
According to Article 526 of the Turkish Civil Code No. 4721, “The heir may establish a foundation by dedicating all or part of the disposable portion of his estate.” What is meant by testamentary dispositions are wills and, although controversial, inheritance agreements.
The person who leaves an inheritance may establish a foundation by dedicating all or part of the disposable part of the estate. As understood, a foundation can be established after the death of the endower.
In order to establish a foundation that will be effective after death, it is necessary to have the capacity to dispose upon death. Here, the person who establishes a foundation must have testamentary capacity. Accordingly , persons who have the power of discernment and have completed the age of 15 can establish a foundation through a will
If the foundation is established by testamentary disposition, the elements required to be included in the foundation deed must also be included in the text of the will. If the goods and rights allocated to the foundation requested to be registered are not sufficient for the realization of the purpose, these goods and rights shall be allocated to a foundation with a similar purpose by the judge, unless the founder has made a statement of will to the contrary.
In foundations established in this way, the magistrate sends a copy of the document on which the foundation was established to the General Directorate of Foundations within 7 days. An application for registration is made to the court upon the notification of the interested parties or the magistrate who opened the will, or ex officio by the General Directorate of Foundations.
What Is A Foundation Deed? What Are Its Elements?
A foundation deed is an official document that contains provisions regarding the establishment, purpose, management and operation of a foundation. This document must be issued by a notary public. In other words, the foundation deed must be issued and approved by a notary public.
There are some minimum elements that must be included in the foundation deed. Let’s list these mandatory elements in items.
- The name of the foundation (It must comply with the law and morality. It must match the purpose of the foundation.)
- The purpose of the foundation (It must be lawful and specific. It must be continuous.)
- Property and rights dedicated to the purpose of the foundation (Must belong to the founder or founders of the foundation. It may be in the form of cash, movable or immovable property. It must meet the minimum level).
- The organization and management of the foundation (management bodies, duties, powers, working procedures, etc.)
- Place of domicile (clearly indicating the foundation’s center of activity)
If the purpose of the foundation and the property and rights dedicated to this purpose are sufficiently specified in the foundation deed, other deficiencies do not require the rejection of the application for the foundation to acquire legal personality. Such deficiencies may be completed by the court before the registration decision is issued, or they may be completed by the court of the foundation’s domicile upon the application of the supervisory authority after the establishment.
It is possible to make subsequent amendments to the foundation deed. Amendments to the foundation deed shall be made upon the written proposal of the board of directors or at least one-fifth of the members of the board, the approval of at least two-thirds of the total number of members of the board, and the decision to be made by the court. In addition, the amendments to be made must not be contrary to the purpose of the foundation and the property or rights allocated to the foundation.
What Is The Minimum Capital Amount For The Establishment Of A Foundation?
The minimum amount of capital required to establish a foundation is determined by the Foundations Council and the new amount is announced every year. Forthe year 2024, this amount was determined as 500,000 TL on average. However, this amount may vary depending on the purpose of the foundation and some side factors.
Registration Of The Foundation
- The foundation decided to be registered is registered in the registry kept by the court of the foundation’s domicile
- It is also registered in the central registry kept at the General Directorate of Foundations.
- If the registration decision is issued by another court, it shall be sent to the court of the domicile of the foundation for registration together with the relevant documents.
- Upon notification by the court of domicile, the foundation registered in the central registry by the Directorate General of Foundations shall be announced in the Official Gazette.
- Registration and announcement shall be made in accordance with the provisions of the regulation issued by the President of the Republic.
The registration decision of the court regarding the foundation may be appealed by the applicant or the General Directorate of Foundations within 1 month starting from the date of notification. In addition, the General Directorate of Foundations or those concerned may file an annulment lawsuit in case there are reasons preventing the establishment of the foundation.
Termination Of The Foundation
According to Article 4721 of the Turkish Civil Code No. 4721, the termination of a foundation can be analyzed under 2 different headings:
- Spontaneous termination of the foundation
- Termination of the foundation by court decision
Let us explain these two different terminations separately.
1. Spontaneous Termination of the Waqf
If it becomes impossible to realize the purpose of the foundation and it is not possible to change it, the foundation shall terminate automatically and be deleted from the registry by a court decision.
The property and rights remaining after the liquidation of the debts of new foundations that terminate spontaneously shall be transferred to a foundation with a similar purpose according to the provisions written in the foundation deed; in foundations that do not have a special provision in their deeds, the foundation shall be transferred to a foundation with a similar purpose by a court decision by taking the opinion of the General Directorate General.
2. Termination of the Foundation by Court Decision
A foundation that is subsequently found to pursue prohibited purposes or to engage in prohibited activities, or whose purpose is subsequently prohibited, shall be dissolved if it is not possible to change its purpose. The foundation shall be dissolved upon the application of the supervisory authority or the public prosecutor after a hearing.
The property of the foundation liquidated by court decision shall be transferred to the General Directorate of Foundations.
Establishment Of Foundations In Turkey By Foreigners
According to Law No. 2762 on Foundations, foreigners may establish foundations in Turkey on the basis of legal and de facto reciprocity. The founder or founders of foundations do not have to be citizens of the Republic of Turkey. However, the majority of the members of the foundations’ governing bodies must be residents of Turkey.
The opening of branches or representative offices by foreign foundations in Turkey is regulated in the Law No. 5253 on Associations and the Regulation on Associations. The application in this regard must be made to the General Directorate of Civil Society Relations of the Ministry of Interior.
Branches and representative offices of foreign foundations operating in Turkey are audited by the General Directorate of Foundations for their purpose and compliance with the law.
Frequently Asked Questions
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What are the Organs of the Foundation?
A foundation has only one mandatory organ. According to the article explained in the Turkish Civil Code, the management body (board of trustees) is the only mandatory partner. The founder may include any organ other than this organ. Some information such as the number and duties of the foundation organs are included in the foundation deed.
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When does a foundation become a legal entity?
A foundation becomes a legal entity upon registration in the registry by the court, regardless of whether the will is expressed through an official deed or a testamentary disposition.
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What are the Sources of Income of Foundations?
The income of the foundation may vary according to the purpose of the foundation’s establishment or the form of capital. However, in general, the main sources of income are rental income, interest income, donations and aids.
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How Many People are Required to Establish a Foundation?
At least 1 person is required to establish a foundation. Real or legal persons can establish a foundation.
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Do Foundations Pay Tax?
Foundations do not pay corporate tax as legal entities. In addition, foundations exempted from tax by the Presidential decree will not pay tax. Tax-exempt foundations can be found on the website of the Revenue Administration.
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What is the competent and authorized court for the establishment of a foundation?
Regardless of the will to establish a foundation, the competent and authorized court that decides whether or not to establish a foundation is the Civil Court of First Instance where the foundation is located.
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What Happens to the Ownership of the Property Dedicated to the Foundation?
With the registration in the registry kept by the competent and authorized court, the ownership of the property dedicated to the foundation passes to the foundation. In other words, with the foundation becoming a legal entity, the ownership of the goods allocated to the foundation is acquired.
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Do Foundations Receive Money from the State?
Foundations can receive in-kind and cash donations and aid from individuals, institutions and organizations in Turkey and abroad, and can donate in-kind and cash to foundations and associations with similar purposes in Turkey and abroad.
