Turkey maintains traditional principles governing substantial ownership and control of airline companies, which include limits on foreign investment and the influence of foreign directors on the board. Specifically, Turkey restricts foreign ownership to 49% to emphasize domestic control and mandates a majority of Turkish directors on the board to safeguard national interests.
The licensing regulations for Turkish commercial carriers of passengers and cargo, as well as air taxi operators, are established by the Turkish Civil Aviation Authority (CAA) through the regulation dated 16.11.2013 known as SHY-6A. SHY-6A outlines specific legal provisions and measures aimed at ensuring oversight of foreign ownership and control in the industry:
Legal Form: Commercial air carriers of passengers and cargo in Turkey must be structured as joint-stock companies (A.S.).
Company Seat: The company's registered seat must be located only in Turkey.
Shareholding Requirement: At least 51% of all shares of the company must be registered shares.
Ownership and Control: The majority of the shareholding, the majority of the board of directors, and the control of the company must be held by Turkish citizens.
Share Transfers: The transfer of name-registered shares, whether partially or entirely, or any increase in shareholding percentage, requires the consent and approval of the Civil Aviation Authority (CAA).
Lifting the Corporate Veil: The CAA is empowered to utilize the principle of "lifting the corporate veil" to reveal the true individual shareholders behind any legal entity shareholder.
With the recent revision on 26.7.2024, the Civil Aviation Authority (CAA) has introduced an additional restriction in SHY-6A to strengthen the enforcement of nationality restrictions. The amendment prohibits the use of usufruct contracts on shares owned by Turkish citizens, which could undermine control over the shares. In accordance with Turkish law, a usufruct can be established on shares or share certificates, providing the usufructuary with complete enjoyment of the shares. This mechanism could have served as an indirect means for foreigners to bypass nationality regulations and gain control over shares held by Turkish citizens. However, following the latest modification, usufruct contracts are now prohibited and no longer permissible on the shares of Turkish citizens.
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