How to Establish an Energy Company in Turkey?
Company establishment in Turkey is one of the initially asked questions by an investor before start up of an investment project. Even if the establishment procedures are subject to the provisions of the Turkish Commercial Code ("TCC"), some terms and conditions may vary from these provisions depending on the investment's sector.
Energy Market as an Investment Sector
As is known, energy market has been one of the promising markets throughout the recent years in Turkey as well as in many other countries which has been preferred mostly by the foreign and domestic investors. According to the statistics, approximately 24 % of all foreign direct investments in Turkey in the year of 2013 have been in energy market and these rates have been increasing year by year.
Following factors play an essential role in increase of number of investments in energy market in Turkey:
- Energy demand of Turkey has been in a growth phase since recent years especially due to industrial developments
- It is intended to decrease the energy import dependence of Turkey by increase of use of renewable energy resources, extention of which is expected up to 30 % until 2013. Therefore, more investments in energy market are needed in Turkey.
- Turkey has the capacity to become an energy hub due to its geographical position. In this connection, investments in natural gas pipeline projects have been made such as TANAP Project which is ongoing and expected to be completed until 2019
- There are several incentives and facilities provided mainly in renewable energy investments in order to increase the number of investments in this sector: For instance, feed-in tariffs, facilitations in land allocation, local equipment support.
- Energy market has been opened to competition and private sector companies to a large extent notably in electricity market. Privatisations and legislative efforts are ongoing in natural gas market
Due to each of above-mentioned factors, energy sector attracts attention of investors in Turkey. As a conclusion of this, the company establishment comes frequently to the fore.
Company Establishment in General and in Energy Market
In general, an investment starts with a company establishment excluding the exceptions such as certain type of investments in renewable energy which have been stated in the related laws and regulations.
Within the framework of the New Turkish Commercial Code, company establishment procedures have been minimized and simplified for investors. One of the most essential legal reforms has been the change that enabled the establishment of single-shareholder companies. Moreover, company establishment has been simplified and accelerated. The Commercial Code sets forth different terms and conditions such as capital amount, liabilities for each company.
If the establishment of an energy company comes into question, the above mentioned conditions vary from the general principles of the Commercial Code in several points. According to the legislation on energy market, only certain company types may operate in energy market. Moreover, electricity market as well as natural gas market requires a certain capital amount for each market activity. Apart from the capital amounts, there are several other essential points to be considered during the company establishment in order to operate the intended market activity.
In conclusion, the investment value as well as the market activity and energy market in which it is intended to operate (electricity, oil and gas) plays an essential role in company establishment in energy market. As mentioned above, company establishment procedures have been accelerated and simplified due to the legal reforms in commercial and company law notwithstanding the company's sector which is regarded as an important development for investors. What is important is only to determine the energy market activity and to fulfill the conditions required for company establishment in the relevant market activity.