Choosing the Right Corporate Structure for an Energy Company in Turkey
⚖️ Introduction
Choosing the right legal structure is one of the most fundamental and strategic decisions when establishing an energy company in Turkey. The corporate form not only determines the administrative and financial responsibilities of the shareholders but also affects licensing eligibility, tax treatment, access to capital markets, and legal liability. Especially in a highly regulated sector like energy, selecting the wrong corporate type can delay operations, increase costs, or even disqualify the entity from applying for certain energy market licenses issued by the Energy Market Regulatory Authority (EMRA / EPDK).
This article explores the available corporate structures under Turkish law, with a special focus on their suitability for energy sector activities, and outlines the pros and cons of each form in this unique regulatory context.
1️⃣ The Turkish Commercial Code Framework
The primary source of corporate law in Turkey is the Turkish Commercial Code (TCC, Law No. 6102). It recognizes several forms of business organizations, but only a few are viable for energy market participation.
The most common structures are:
- Limited Liability Company (LLC) – Limited Şirket (Ltd. Şti.)
- Joint Stock Company (JSC) – Anonim Şirket (A.Ş.)
Other legal forms, such as sole proprietorships or partnerships (e.g., ordinary partnerships or commandite companies), are not suitable for licensed energy activities due to their limited legal personality and regulatory inadequacy.
2️⃣ Joint Stock Company (A.Ş.): The Regulatory Favorite
For energy companies, the Joint Stock Company (JSC / Anonim Şirket) is the preferred—and often required—structure, particularly for the following activities:
- Electricity generation
- Distribution
- Natural gas supply
- Wholesale or retail sale of energy
- Renewable energy investments over 1 MW
📌 Key Features:
- Minimum capital requirement: TRY 250,000
- Board of Directors: At least one member
- Shares can be publicly traded
- Liability limited to the company assets
- Legal personality is independent from shareholders
✅ Advantages for Energy Companies:
- Eligibility for EMRA licenses (some licenses require JSC status)
- Easier to attract foreign investors
- Credibility with banks and institutions
- Access to capital markets (IPO possibility)
- Allows issuance of different share classes
❌ Disadvantages:
- More complex corporate governance
- More expensive to set up and maintain
- Mandatory independent auditing above certain thresholds
3️⃣ Limited Liability Company (Ltd. Şti.): Simpler But Limited
A Limited Liability Company is a more straightforward and cost-effective option for small-scale operations, such as:
- Energy consulting or service companies
- Installation & maintenance providers for renewable systems
- Small-scale solar projects under 1 MW
📌 Key Features:
- Minimum capital: TRY 10,000
- Partners: Up to 50 individuals or entities
- Managers: At least one appointed manager
- No public offering allowed
✅ Advantages:
- Simpler incorporation and governance
- Lower initial capital
- Easier to manage for family or founder-owned businesses
❌ Disadvantages:
- Not eligible for some EMRA licenses
- Limited ability to raise capital
- Transfer of shares requires notarized process and partners’ approval
4️⃣ EMRA Licensing Requirements and Corporate Form
Under the Electricity Market Licensing Regulation and Natural Gas Market Law, only JSCs are allowed to obtain the following licenses:
- Generation License
- Distribution License
- Import License
- Wholesale License
- Market Operating License
In contrast, companies with Ltd. Şti. status are only eligible for unlicensed small-scale generation, such as rooftop solar installations under 1 MW.
Conclusion: If you plan to operate in the core licensed energy markets, such as power generation or supply, a Joint Stock Company is legally mandatory.
5️⃣ Foreign Investor Considerations
Foreign investors must also pay attention to the corporate form:
- No nationality restriction for shareholders in either JSC or LLC.
- Foreign entities can directly become shareholders.
- Foreign companies must appoint a tax representative and comply with FDI Law No. 4875.
JSCs are often more attractive to foreign investors because of:
- Share transfer flexibility
- Professional governance mechanisms
- Higher transparency
6️⃣ Taxation and Accounting Implications
Both JSC and LLC are subject to the same corporate income tax rate (currently 25%). However, the tax reporting and accounting standards differ slightly.
| Feature | JSC (A.Ş.) | LLC (Ltd. Şti.) |
|---|---|---|
| Independent Audit Required? | Yes, if thresholds met | Yes, if thresholds met |
| Share Transfer | Freely transferrable | Restricted and notarized |
| Dividend Distribution | Board resolution required | General assembly approval |
| Public Offering | Possible | Not allowed |
7️⃣ Final Legal Tips
✅ Consult a corporate lawyer before choosing the company type
✅ Consider your energy project scale and license needs
✅ Understand the shareholder liability and governance obligations
✅ Ensure your structure is compatible with EMRA requirements
✅ Choose JSC if you aim for large-scale licensed operations
İNTERN LAW FACULTY STUDENT
YAĞMUR YORULMAZ
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