Legal 500 Country Comparative Guides 2026 – Turkey Project Finance

1. What are the typical ownership structures for project companies in your jurisdiction? Does this vary based on the industry sector?

Project financings in Türkiye are almost invariably implemented through a dedicated special purpose vehicle (SPV) incorporated in Türkiye. The SPV is established specifically for the project to ring-fence and minimise project-related risks and to allow all project contracts and security arrangements to be managed through a single entity.

The ownership chain typically consists of an investor or sponsor consortium holding the SPV either directly or through one or more intermediate holding companies. These holding companies may be Turkish or offshore, depending on the sponsor group's tax, financing and regulatory considerations. In smaller projects, it is common for a single sponsor to hold 100% of the shares. In larger or more technically complex projects, multiple investors often participate, sharing ownership to combine financial capacity and technical expertise.

Ownership structures also vary by sector, project scale and investment type. In regulated sectors—such as energy, transportation and healthcare infrastructure—tender documentation and sector-specific regulation may impose requirements relating to technical qualifications, bidder eligibility and, in some cases, Turkish participation. In these projects, bankability and "credibility" are heavily influenced by (i) the transferability of licences/permits, (ii) the robustness of step-in and substitution mechanisms, and (iii) any regulatory restrictions on changes of control (including notification/approval requirements) under the applicable regime. By contrast, private or smaller-scale projects typically feature simpler structures, often with a single sponsor exercising full control over the SPV.

2. Are there any corporate governance laws or accounting practices that foreign investors in a project company should be aware of?

The Turkish Commercial Code (TCC) is the principal source of corporate governance rules for Turkish project companies, covering capital maintenance, shareholder and board authorities, related-party dealings, representation, financial statements and audit. Though less usual, where the project company is publicly held, additional Capital Markets Board (CMB) governance and disclosure rules apply.

On the reporting side, independent audit requirements apply to entities that meet the relevant thresholds or operate in regulated sectors. Sustainability reporting has also become a real compliance topic: Türkiye Sustainability Reporting Standards ("TSRS") apply to entities that fall within the scope defined by the Public Oversight Authority ("KGK"), with application starting for accounting periods beginning on or after 1 January 2024 and the scope refined by KGK decisions published in December 2024.

In respect of accounting practices, Turkish companies typically prepare financial information under two parallel frameworks: (i) IFRS (International Financial Reporting Standards) and (ii) the Turkish tax-based accounting regime under the Tax Procedural Code (VUK), with the former being more commonly used in financing contexts. A further, immediately practical issue for financings signed in late 2025 is inflation accounting: legislation adopted on 24 December 2025 suspended inflation adjustments for the 2025–2027 fiscal years, which may affect covenant calibration, dividend tests and the comparability of historical financial information used in underwriting.

3. If applicable, what forms of credit support from sponsors or host governments are typically provided?

In Turkish project finance transactions, the type of credit support expected from sponsors depends largely on the scale of the investment and the risk allocation agreed with the lenders. For projects that involve significant construction or operational risks, sponsors may be required to commit additional equity, cover potential cost overruns or provide a completion undertaking to ensure the project reaches commercial operation. This is usually supplemented by EPC-related performance security (parent guarantees, performance bonds/LCs), undertakings to maintain key permits/licences, and—where relevant—funding and maintenance of reserve accounts. Sponsor support typically reduces materially once the project reaches completion and stabilized operations.

On the host-government/public-sector side, the instruments vary by sector and procurement model. In renewables, support is most often delivered through statutory support schemes and incentives (e.g., YEKDEM type mechanisms and YEKA tender structures with long term purchase features, plus certain fee/permit incentives). In transport PPP/BOT projects, the administration may provide demand/usage or availability-style payment mechanics, detailed tariff/indexation and termination compensation regimes; certain eligible projects may also benefit from Treasury "debt assumption", subject to statutory conditions. In healthcare PPPs (notably city hospitals), the key credit enhancement is typically the availability/service payment structure from the Ministry of Health with defined adjustment/indexation mechanics, and debt assumption may again be relevant where eligibility criteria are met.

Across PPP models, additional public-side supports may also include land allocation and expropriation facilitation, permitting/interface coordination (utilities, access, relocations), and in some cases transactional tax relief (such as stamp duty exemptions) depending on the governing PPP/BOT framework.

4. What types of security interests are available (and suitable) for a project financing in your jurisdiction? Are direct agreements used?

The security package is tailored to the project's asset base and cashflows and is usually complemented by direct agreements and a robust cash-control structure.

Core security typically includes share pledges (including usufruct) over the project company (and, where relevant, pledges over intermediate holding companies); mortgages over project real estate (land, buildings and, where available, mortgageable rights registered at the land registry); pledges over movable assets and equipment (implemented under the registry-based movable pledge regime TARES); assignments/pledges of receivables under key project documents (offtake, EPC, O&M, insurance proceeds and other material receivables); and security/controls over bank accounts, including pledged bank accounts and waterfall mechanics.

It is also common to require guarantees or sureties from the sponsors, group companies or, in certain cases involving public entities, undertakings provided by the host government.

5. How are the above security interests perfected?

Security in Turkish project financings is typically structured on an "asset-by-asset" basis, because Turkish law does not generally recognise a single floating charge covering all present and future assets in the manner seen in some common-law jurisdictions.

The perfection steps for security interests in Turkish project financings depend on the type of asset or right being secured. Share pledges over joint stock companies are completed by signing the pledge agreement, endorsing the share certificates and delivering them to the lenders, followed by recording the pledge in the company's share ledger. For limited liability companies, the pledge agreement must also be executed before a notary public.

Account pledges become effective once the pledge agreement is signed and the relevant account banks acknowledge the pledge. The bank then records the pledge in its internal systems to confirm the lenders' priority.

Pledges over movable assets are perfected through registration in the TARES system, which is the official electronic registry for movable pledges. On the other hand, certain assets such as motor vehicles, aircraft, ships and mining rights require registration with their own specialised registries as well.

Mortgages over immovable property or usufruct rights are perfected through execution before the land registry and the corresponding registration in the land registry records.

Assignments of receivables require a written assignment agreement. While notification of the debtor is not mandatory under the Turkish Code of Obligations, in practice it is standard to notify the debtor to prevent a good-faith payment to the assignor, which could otherwise release the debtor from its obligations. Assignments of subordinated receivables follow the same formalities and are executed by the subordinated creditors in favour of the lenders.

Guarantees and sureties must be made in writing. If the guarantor is an individual, the guaranteed amount, date and type must be handwritten and the spouse's written consent is required unless an exemption applies, such as where the guarantor is a shareholder or director of the debtor company. For evidentiary purposes and to avoid disputes on timing, assignment agreements and certain security documents are often executed before a notary public.

6. Please identify how security is enforced (notably the enforcement options available for secured parties) both pre and post insolvency/bankruptcy of the project company?

(i) Pre-insolvency enforcement

As a general rule, enforcement of mortgages and pledges is conducted through the competent execution office, which initiates a public auction for the sale of the mortgaged/pledged assets. While a public auction is a transparent method, it may be challenged by the debtor or third parties and, in practice, can be disadvantageous due to its procedural complexity and relatively lengthy timeline.

For movable pledges, the Movable Pledge Law No. 6750 also allows the pledgee, upon non-performance, to (a) request transfer of ownership of the pledged movable to itself, or (b) assign/transfer its receivable under the pledge agreement to a licensed asset management company. In addition, the Capital Markets Law No. 6362 grants a similar right to request ownership transfer for pledges over dematerialised capital markets instruments (e.g., dematerialised shares of public companies), provided that the right of transfer is expressly stipulated.

Some security documents provide for the possibility of a private sale. While a contractual private sale mechanism is not expressly regulated under Turkish law and may face enforceability hurdles, a legislatively recognised "private sale with court approval" mechanism was added to the Enforcement and Bankruptcy Law No. 2004. Under this route, following notification of the valuation, the debtor may seek court authorisation to sell the pledged asset within a short period, offering an alternative to a public auction.

(ii) Post-insolvency enforcement

In the case that the project company is declared bankrupt by the courts and the liquidation process is commenced against the company via official bankruptcy offices, the secured party may not proceed with an individual debt collection proceeding but would have to apply to the bankruptcy offices to be registered and recorded during the liquidation process. The secured assets are sold as part of the sale of the bankruptcy estate, and distribution of proceeds to the secured creditor may be delayed where there are challenges regarding ranking or the underlying receivable.

According to the Execution and Bankruptcy Law No. 2004, the receivables of secured creditors have a right to preference over the sale proceeds of the secured assets.

Public receivables arising from real property and assets such as customs duties, building and land tax will come after the pledged receivables in ranking for collection from the sale proceeds of such secured assets. The distribution of the sale proceeds of the bankruptcy estate to the creditors, which do not have secured receivables, will be ranked as follows:

First rank:

(i) Receivables of the employees, including notice and severance pay accrued within a year prior to the bankruptcy, and notice and severance pay that accrues due to the termination of the employment following the bankruptcy of the company.

(ii) Debts of the employer to institutions and funds that are legal entities incorporated to establish aid funds for employees.

(iii) Any and all alimony receivables arising from family law accrued within a year prior to the bankruptcy.

Second rank:

Receivables of persons whose assets have been left to the administration of the bankrupt as a guardian/ administrator.

Third rank:

Receivables that are privileged pursuant to the provisions of special laws.

Fourth rank:

All other receivables of the creditors which do not enjoy a privilege.

7. What are other important considerations in relation to the security regime in the jurisdiction that secured parties should be aware of?

Three themes are significant to consider in Turkish security practice: formalism/perfection, operational control, and enforcement practicalities. First, perfection is highly sensitive to form and timing—registrations, notarisation, translations and debtor/bank notifications are not "nice to have" items; they are often determinative of enforceability and priority. Secondly, because formal enforcement can be time-consuming, lenders place significant weight on contractual and operational control mechanisms, in particular cashflow control, account bank acknowledgements and direct agreements that provide notice, cure and substitution/step-in pathways before value is lost. In this context, Turkish-law structures sometimes also include governance levers such as a usufruct over shares (which, unless otherwise agreed, may allow the usufructuary to exercise voting rights), to support an orderly cure or change of control in a stress scenario.

As a further practical consideration, although "security agent" and parallel debt structures are widely used in foreign law-governed syndicated financings with Turkish law security, these concepts are not expressly regulated under Turkish legislation and there is, to date, to the best of our knowledge, no settled Turkish Supreme Court precedent squarely confirming their effectiveness as a matter of Turkish law in all scenarios. Market practice therefore relies on careful drafting and on doctrinal/analogous concepts recognised by Turkish law, including fiduciary arrangements (inançlı işlemler) and indirect representation (dolaylı temsil), while also recognising that court enforcement mechanics may still require creditor-by-creditor action depending on the structure adopted.

Subordination rules and clawback exposure may be viewed as potential concerns for a foreign lender. With respect to contractual subordination, (i) obtaining specific performance through the execution offices may not be feasible, as contractual subordination is neither expressly recognised nor well tested under Turkish law, and (ii) if the debtor is declared bankrupt, creditor ranking will be determined in accordance with the Execution and Bankruptcy Law No. 2004 (see Question 6 for the order of priorities), regardless of any contractual arrangements. In addition, lenders may face clawback (avoidance) risk in relation to other creditors of an insolvent Turkish debtor, as such creditors may apply to the courts to set aside certain transactions entered into prior to insolvency. Voidable transactions typically include: (a) transactions carried out within one year prior to the commencement of insolvency proceedings, such as granting security for an existing debt (other than security that the debtor had previously undertaken to provide); and (b) transactions entered into within two years prior to the commencement of insolvency proceedings, such as transfers for no consideration (including donations), transactions for a consideration materially below fair value, or transactions undertaken with the intention of prejudicing creditors.

In addition to the above, guarantees and suretyships are key credit support options for lenders and equity investors:

(i) Guarantee: A guarantee obligation is independent from the underlying agreement it supports. Accordingly, issues affecting the validity of the underlying contractual relationship generally do not impair the enforceability of the guarantee. As a rule, a guarantee is not subject to formal establishment requirements (e.g., a written form or a fixed cap), except in the case of a personal guarantee. Under the Turkish Code of Obligations, the formal requirements applicable to suretyship also apply to the creation of a personal guarantee.

(ii) Surety: The surety's obligation is dependent on the existence and validity of the principal debt; if the principal debt is invalidated for any reason, the surety is released from its obligations (unlike a guarantee). The surety's liability is therefore ancillary in nature. Suretyship must be executed in writing and must include the surety's handwritten statement of the agreed maximum liability amount. In addition, for individual sureties, the agreement must specify the suretyship term and the type of suretyship (e.g., ordinary or joint and several). Where a married individual acts as surety, the spouse's consent must be obtained on or before the date of the suretyship agreement, subject to certain statutory exceptions.

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