What is Startup Law?

Startup Law encompasses a broad spectrum, from the establishment of companies and their operational processes to intellectual property rights and financing methods. It is crucial for entrepreneurs to understand their legal responsibilities, rights, and obligations in order to ensure the sustainability of their business.

Intellectual Property Protection

One of the most valuable assets for entrepreneurs is their intellectual property. In this context, various protection methods are available:

1. Trademark Registration:
   • Application Process: Trademark registration is done with the Turkish Patent and Trademark Office (TPTO). Initially, the eligibility of the trademark application is examined. After the application, the results of the examination are announced within 2-3 months.
   • Protection Period: Registered trademarks are protected for 10 years and can be renewed every 10 years.
   • Objection Process: There is an objection process for registered trademarks. Other parties can file objections and request the cancellation of the registration.
2. Patent:
   • Types: There are two main types of patents: invention patents (20 years) and utility models (10 years).
   • Application and Examination: A patent application must meet the criteria of novelty and industrial applicability. The examination process checks the originality of the invention after submission.
3. Copyright:
   • Protected Works: Written works, music, paintings, and software are protected by copyright.
   • Scope of Rights: The author has rights to reproduce, distribute, and display their work, among other things.

Company Formation Process

Entrepreneurs must decide which type of company to choose when starting their business. In Turkey, the two most common types of companies are:

1. Limited Liability Company (LLC):
   • Formation Requirements: An LLC can be established with at least one and at most 50 partners. The minimum capital requirement is 50,000 TRY.
   • Liability: Partners have limited liability, meaning they are only liable up to the amount of capital they contribute.
   • Board of Directors: Management in LLCs is typically carried out by directors appointed by one or more of the partners. The management structure can be flexible.
   • General Assembly: Partners hold general assembly meetings periodically to make important decisions.
   • Profit Distribution: Profit is distributed among partners in proportion to their shares. Profit distribution is determined by the decision of the general assembly.
   • Audit: LLCs are generally not subject to independent audits. However, this rule may change for companies of a certain size.
   • Taxation: LLCs pay corporate tax on their profits. The current rate in Turkey is 20% (subject to change).
   • Capital Increase and Decrease: The company’s capital can be increased or decreased, but these actions are subject to specific legal procedures.
   • Dissolution and Liquidation: The LLC can be dissolved by the decision of the partners. The dissolution process includes liquidation, and debts must be settled.
   • Establishment Process: The establishment of an LLC generally requires fewer procedures compared to other company types. An application is made to the trade registry with the necessary documents.
2. Joint Stock Company (A.Ş.):
   • Formation Requirements: A.J.S. can be established with at least one partner and no maximum limit. A minimum capital of 250,000 TRY is required.
   • Capital Structure: The capital is divided into shares, allowing easy transfer of ownership.
   • Management: Joint Stock Companies are typically managed by a board of directors, which is elected by the shareholders and is responsible for company management.
   • General Assembly: Shareholders meet at least once a year to make major decisions.
   • Profit Distribution: The company’s profits are distributed among shareholders according to the number of shares. The decision for profit distribution is made by the general assembly.
   • Audit: Joint Stock Companies may be subject to independent audits depending on their size.
   • Taxation: Joint Stock Companies pay corporate tax on their profits. The current rate in Turkey is 20% (subject to change).
   • Capital Increase and Decrease: Changes in capital (increase or decrease) are possible but must follow specific legal procedures and require approval by the general assembly.
   • Dissolution and Liquidation: The company can be dissolved by the decision of the shareholders or by court order. The dissolution process includes liquidation.
   • Establishment Process: The establishment of a Joint Stock Company involves more complex procedures than an LLC, such as preparing the articles of incorporation and applying to the trade registry.
   • Transfer of Shares: Shares are easily transferable without needing the approval of other shareholders, enhancing the liquidity of the company.

Data Protection and Personal Data Protection Law

Entrepreneurs must comply with the Personal Data Protection Law (KVKK) in their data collection processes:

1. Processing of Personal Data:
   • Obligation to Inform: The data subject must be informed about the purpose and duration of the data collection.
   • Data Permissions: Explicit consent must be obtained for the processing of personal data.
2. Data Security:
   • Technical and Administrative Measures: Various technical measures, such as encryption and access controls, must be implemented to ensure data security.

Importance of Contracts

For startups, contracts form the legal foundation of the business. Below are some important types of contracts:

1. Non-Disclosure Agreement (NDA):
   • Purpose: Defines the obligation of the parties to protect each other’s trade secrets.
   • Scope: Specifies which information is confidential, the duration of confidentiality, and other relevant details.
2. Shareholders Agreement:
   • Purpose: Regulates the rights and obligations among the shareholders of the company.
   • Scope: Includes provisions on the transfer of shares, voting rights, profit distribution, and more.
3. Employment Contracts:
   • Employee Rights: Covers aspects such as employee rights, duties, working hours, and more.
   • Termination Conditions: Specifies how the contract can be terminated.
4. E-Commerce Contracts:
   • Consumer Rights: Defines the responsibilities of e-commerce entrepreneurs towards consumers.
   • Distance Sales: Regulates the sales processes while protecting the rights of consumers.

Legal Framework in Investment Processes

The investment process for startups is a critical phase from a legal perspective. Key elements of this process include:

1. Investment Agreements:
   • Types: Investment agreements can include share purchase agreements, capital increase agreements, etc.
   • Terms: Covers investor rights, ownership shares, management rights, and other related topics.
2. Due Diligence:
   • Review Process: Investors conduct a thorough review of the startup before making an investment. Financial reports, contracts, and legal obligations are scrutinized.
3. Shareholder Agreements:
   • Cooperation Terms: Regulates the relationship between shareholders and helps prevent potential disputes.

Laws Entrepreneurs May Encounter

Entrepreneurs may encounter various legal regulations, the most important of which are:

• Turkish Commercial Code (TTK): Regulates company formation, management, bankruptcy, etc.
• Turkish Code of Obligations: Governs contractual relationships and obligations law.
• Intellectual Property Law: Protects patents, trademarks, and copyrights.
• Personal Data Protection Law (KVKK): Regulates the processing of personal data.
• Consumer Law: Regulates consumer rights and relationships.

Why Us?

It is essential for entrepreneurs to seek professional legal support to ensure their business progresses in a healthy and sustainable manner:

• Reducing Legal Risks: Professional legal consultancy protects your venture from potential legal risks.
• Managing Investor Relations: Ensures smooth management of relationships with investors.
• Saving Time and Resources: Expert legal support allows entrepreneurs to use their time and resources more efficiently.

As Güneş & Güneş Law Firm, with 25 years of experience, we take pride in providing the legal support that entrepreneurs and companies need. Specializing in startup law, company formation, mergers and acquisitions, contract drafting, and all startup-related matters, our expert team is here to assist you. We offer comprehensive services to help protect innovative business ideas within a legal framework, secure investment processes, and establish strong commercial relationships. At every step, we provide strategic guidance to help you achieve your business goals, building the necessary legal infrastructure for a successful business career.