Company structuring in Turkey mainly focuses on two types; joint
stock and limited liability companies. Alteration in partnership
structure or share transfer of these kinds of companies shall be
subject to commercial legislation.
Electricity generation companies which are established in form
of limited liability or joint stock company shall carry out
assignment of share transactions under Electricity Market Law as
well as Turkish Commercial Code, which means that this kind of
transactions shall be executed in certain circumstances as
regulated in energy legislation.
Assignment of shares is more restrictive as compared to joint
stock companies. Assignment of share and the related transactions
shall be made in written form and parties' signatures shall be
certified by public notary. The company managers shall apply to the
trade registry for registration of assignment of shares. In case
that the application has not been made within thirty (30) days, the
outgoing partner can apply to the trade registry to erase his/her
name with regard to these shares.
There are mainly two types of shares in joint stock companies
which are "bare shares" and "issued shares".
Bare shares are the shares which are not certificated by the
company. For the transactions of these shares transfers, parties
must sign an assignment of claims contract and assignment of
liability agreement as occasions requires. Besides, both assignment
of claims and liability contracts should be signed while
transferring the unpaid shares under the Turkish Commercial Code.
Fully paid shares can be assigned without company's approval
except the mentioned limitation and restrictions in law or article
A joint stock company may also issue bearer or registered
shares. Registered share certificate can be assigned by an
endorsement without any limitations except as otherwise provided by
law or in article of association however for unpaid registered
share certificates, above mentioned conditions are applied (e.g.
assignment of claims and liabilities). There could be several
limitations or restrictions by law regarding share assignment in
order to maintain company's capital in case of nonpayment of
shares, which aims to eliminate the risk of collection of share
price by way of transferring it to third parties.
By the registry to shareholders' stock register of assigned
shares the assignment process is completed and only persons who are
on the registry list are regarded as a shareholder and third
parties who obtain the registered shares quoted on the stock
exchanges must be registered to share holders' stock register
Transfer of possession is sufficient for assignment of bearer
Given that the commercial law perspective above, the companies
operating in energy industry are also subject to Commercial Code
yet transfer of shares of these companies is dependent on several
conditions foreseen in Electricity Market Law. In this regard,
share transfer restrictions can vary depending upon license status
of a company.
As is known energy generation are required to hold a license
after meeting several conditions required by primary and secondary
legislations. License type varies by operation type of the company,
which means that companies which intend to operate in electricity
generation, transmission, distribution, wholesale and retail trade
must hold different kind of licenses and apply to different public
authorities as well. Since regulatory authority is keen on
corporate structures to license persons and during the operations ,
it is not allowed to act freely in corporate and share structuring
for persons operating in energy without approval of Energy Market
Regulatory Authority (EMRA).
Moreover, the electricity generation legislation strictly
restricts companies to transfer shares in pre-license phase that
the contrary may result with revocation of the pre-licenses.
However after the pre-license phase, shares of license holder
company can be transferred under several circumstances. Share
transfers exceed 5 % in public companies and 10 % in non-public
companies and other transactions which cause control change in
company management shall be subject to EMRA's approvals.
In case of failure to comply or nonfulfilment of conditions
mentioned above, revocation of license, pre-license or
administration fine come to the fore.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
Turkey has amended the Electricity Market Law numbered 6446 to promote use and security of domestic energy resources. Under the amendments, planned capacity mechanisms must give priority to local energy sources.
Turkey's energy regulator previously ruled (decision numbered 5709, dated 30 July 2015) that a total capacity of 2,000 MW would be reserved in the period up until 2020 for wind power pre-license applicants to connect to the grid.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).