Kesikli Law Firm

Introduction On 9 July 2025, Climate Law No. 7552 was published in the Official Gazette and entered into force immediately, establishing Türkiye’s first comprehensive climate legislation and, more importantly for the readers of this article, the legal foundation for a national Emissions Trading System. The era of unpriced carbon in Türkiye is over. That is not hyperbole. The TR ETS pilot phase is launching in 2026. Secondary legislation is being finalized. The Carbon Market Board has been constituted. And the EU’s Carbon Border Adjustment Mechanism has already begun imposing financial obligations on imports from countries without equivalent carbon pricing, which means Turkish exporters of steel, cement, aluminium, and fertilizers are feeling the pressure right now, as you read this. This article is written for business executives, in house counsel, compliance officers, and operations directors who need to understand what the TR ETS means in practice: what it requires, when requirements take effect, how much noncompliance will cost, and where the strategic opportunities lie. I have tried to avoid the purely academic and focus on what matters when you are sitting in a boardroom making resource allocation decisions.   Legislative Background Türkiye ratified the Paris Agreement in 2021, setting a net zero target of 2053. For several years after ratification, the practical question was: when will this commitment translate into enforceable obligations for the private sector? The answer came through a series of policy signals, starting with references to a planned ETS in the annual Medium Term Programs from 2022 onward, followed by the Long Term Strategy document (LTS 2053) presented at COP 29 in November 2024. The Climate Law was adopted by the Grand National Assembly on 2 July 2025. It had been expected earlier in the spring session, but the government opted for additional review following feedback from industry groups. In our view, the delay was productive. The version that ultimately passed reflects a more considered approach to phasing and penalty calibration than what was circulating in draft form in early 2025. The law was published in Official Gazette No. 32951 on 9 July 2025 and took effect the same day. Within two weeks, on 22 July 2025, the Directorate of Climate Change published the first draft implementing regulation for public consultation, with the comment period closing on 4 August 2025. That timeline was aggressive, and it drew criticism from some industry associations who felt the window for meaningful input was too narrow. Whether or not you agree with that criticism, the pace signals the government’s determination to have the pilot operational in 2026.   Institutional Architecture One of the things we tell clients early in any briefing on the TR ETS is this: you need to know not just what the rules are, but who enforces them. The Climate Law creates a multi-layered governance structure, and understanding which institution does what will save you significant time and frustration when compliance questions arise. 2.1 The Carbon Market Board The Carbon Market Board (Karbon Piyasası Kurulu) sits at the top of the TR ETS governance structure. It is chaired by the Minister of Environment, Urbanization and Climate Change, and its members include deputy ministers from seven ministries as well as the heads of key regulatory bodies. The Board’s mandate covers the major strategic decisions: approving national allocation plans, setting the distribution of free allowances, determining offset limits, and deciding on the parameters of both the pilot and implementation phases. In practice, this means the Carbon Market Board will be the institution that determines how much your company pays for carbon. The composition is deliberately cross-ministerial, which should help balance industrial competitiveness concerns with environmental ambition. But it also means the Board could become a venue for inter-ministerial tensions, particularly as the transition to auctioned allowances approaches. 2.2 The Directorate of Climate Change The Directorate of Climate Change (İklim Değişikliği Başkanlığı) handles the operational side: issuing GHG emission permits, overseeing MRV processes, managing offset mechanisms, and coordinating climate policy at the national and international level. If the Carbon Market Board sets the strategy, the Directorate executes it. For most businesses, the Directorate will be the primary point of regulatory contact.  2.3 Energy Exchange Istanbul and EMRA Energy Exchange Istanbul (EPIİAŞ, or EXIST internationally) is the designated market operator. It will organize secondary market trading, manage the national registry system for allowances, and conduct primary market auctions when those commence. The Energy Market Regulatory Authority (EMRA/EPDK) oversees market integrity, surveillance, and prevention of market abuse. For companies that have dealt with EMRA in the energy context, this institutional continuity should provide some degree of familiarity. The key takeaway: four institutions, each with distinct roles. Know which one you are dealing with for each obligation.   Scope and Sectoral Coverage This is the section most of our clients turn to first, so let us be direct. If your facility directly causes greenhouse gas emissions and those emissions exceed 50,000 tonnes of CO2 equivalent per year, you are almost certainly within scope. The covered sectors include electricity generation (installations with a total rated thermal input of 20 MW or more), cement, iron and steel, aluminium, fertilizers and ammonia, chemicals, oil refining, glass, lime, ceramics, mineral fiber, and brick production. The overlap with the EU CBAM is not coincidental. Türkiye’s cement exports account for nearly 30% of the EU’s total cement imports. Iron and steel represent about 9%. The TR ETS was designed, in part, to create a domestic carbon price that can be deducted from CBAM liabilities. If your sector is covered by CBAM, you can assume you will be covered by the TR ETS as well. One important detail: Türkiye’s MRV system has been operational since 2015 and already covers roughly 770 installations. If your facility has been reporting under the existing MRV framework, the transition to ETS compliance will be less dramatic than for a facility starting from zero. But if you have been treating MRV as a box-ticking exercise, that approach will no longer suffice. The quality and accuracy of your reported data will now carry real financial consequences.   Table 1: TR ETS Sector Coverage and EU CBAM Alignment Sector Threshold EU CBAM Overlap Electricity Generation ≥20 MW thermal input Yes (Electricity) Cement >50,000 tCO2e/year Yes Iron and Steel >50,000 tCO2e/year Yes Aluminium >50,000 tCO2e/year Yes Fertilizers / Ammonia >50,000 tCO2e/year Yes Chemicals >50,000 tCO2e/year Partial Oil Refining >50,000 tCO2e/year Partial Glass, Lime, Ceramics >50,000 tCO2e/year No   The Phased Rollout: Pilot and Beyond 4.1 Pilot Phase (2026 to 2027) The pilot phase is where we are right now, and it is the period that matters most for companies making decisions today. Let us walk through what it means operationally. During the pilot, all allowances are distributed free of charge. There is no auctioning, no market price in the traditional sense, and carbon credit offsets are not permitted. Administrative penalties apply at only 20% of their full statutory levels (an 80% reduction). Entities covered by the ETS are deemed to hold temporary permits and must obtain formal GHG emission permits from the Directorate within three years of the law’s entry into force, meaning by July 2028 at the latest. Now, we have heard some clients interpret this as meaning the pilot is essentially a rehearsal with no real teeth. That is a mistake. Even at 20% of statutory levels, the fine for failing to surrender sufficient allowances is still calculated at twice the prevailing allowance price per missing unit. The obligation to surrender additional allowances for excess emissions in the following year is fully operative. And perhaps most critically, repeated noncompliance during the pilot can lead to permit revocation, which means your facility cannot legally operate. We advised a mid-sized cement manufacturer last autumn that approached the pilot as a “soft launch.” After reviewing their monitoring infrastructure, it became clear that they lacked the internal capacity to produce verified emissions reports to the standard required by the Directorate. Had they waited until the full implementation phase to address that gap, the consequences would have been far more costly. The pilot is the time to fix these problems. 4.2 Full Implementation (2028 to 2035) The transition to full implementation will bring several material changes. Allowances may begin to be offered through primary market auctions, introducing an actual market price for carbon. Free allocation will continue, but based on a benchmarking methodology that rewards installations operating more efficiently than the sectoral average. Domestic offset credits will become permissible up to 10% of surrender obligations. Market stability mechanisms and allowance banking and borrowing features are expected to become operational. The timeline is also politically significant. By 2028, the EU CBAM will be fully operational, and the gap between having a domestic carbon price and not having one will translate directly into euros for Turkish exporters. The government understands this, which is why the Pre Accession Economic Reform Program for 2026 to 2028 treats the TR ETS as a core reform measure. Table 2: Pilot vs. Full Implementation at a Glance Feature Pilot (2026–2027) Full Phase (2028–2035) Allowance Allocation 100% free Free + auctions Offset Credits Not permitted Up to 10% of obligations Penalties 80% reduction Full statutory amounts Banking / Borrowing Not available Available Market Stability Not applicable Reserve mechanism planned   How Allowances Work Under the Climate Law, an allowance is a tradeable, electronically registered instrument representing the right to emit one tonne of CO2 equivalent during a specified period. Allowances are issued through the national registry and distributed either for free or through auctions. The free allocation methodology uses a benchmarking approach at the sub-installation level. This is similar to what the EU ETS does, and the principle is straightforward: if your facility operates more efficiently than the sector benchmark, you receive more allowances than you need and can sell the surplus. If you operate less efficiently, you face a shortfall and must either reduce emissions or acquire additional allowances on the secondary market. One restriction worth flagging: the law prohibits the use of allowances as collateral. This means you cannot pledge your allowances against a loan or use them as security for financial obligations. For companies accustomed to treating tradeable instruments as balance sheet assets, this limitation requires adjustment in financial planning. Financial institutions and entities without compliance obligations are expected to be excluded from market participation in the initial phases. This was a deliberate policy choice to prevent speculative trading from distorting prices before the market has sufficient liquidity and depth to absorb it. Whether that restriction will hold as the market matures remains an open question.   Monitoring, Reporting, and Verification If we could give one piece of advice to every facility within the TR ETS scope, it would be this: get your MRV right before you worry about anything else. Türkiye’s MRV framework has been operational since 2015, modeled on the EU system. Approximately 770 installations already report annually. Under the TR ETS, the requirements tighten. All covered entities must prepare annual emission data reports in accordance with monitoring plans confirmed by the Directorate of Climate Change. These reports must be verified by independent third party verifiers accredited by the Turkish Accreditation Agency (TÜRKAK). Operators must maintain emissions data for at least ten years. All processes must run through the official digital platforms. The verification requirement is not cosmetic. Verifiers will be checking the underlying data, not just the final numbers. We have seen facilities where emissions calculations relied on outdated emission factors or where fuel consumption data was estimated rather than metered. Under the current framework, these shortcomings might draw a letter from the regulator. Under the TR ETS, they can result in fines of up to 5 million Turkish Liras, the revocation of allocations, and the invalidation of offset purchases. The stakes are fundamentally different.   Penalties We spend a disproportionate amount of time on this section in client meetings, because in our experience, nothing focuses corporate attention like concrete numbers. So let us lay out the penalty structure clearly. Failure to surrender allowances: Administrative fine equal to twice the most recent allowance market price for each missing allowance, plus an obligation to surrender additional allowances covering the excess emissions in the following compliance year. In practical terms, if the market price is 100 TL per allowance and you are 10,000 allowances short, the immediate fine is 2 million TL, and you still owe the 10,000 allowances next year.  MRV violations: Administrative fines ranging from 500,000 to 5,000,000 Turkish Liras for failures related to emissions reporting, monitoring plan compliance, and verification obligations.  Operating without a permit: If your facility operates without the required GHG emission permit or after a permit has been revoked, the penalties escalate further, including potential operational restrictions that could force a temporary shutdown.  Permit revocation trigger: If a participant fails to surrender at least 80% of verified emissions for three consecutive compliance periods, the Directorate may revoke the GHG emission permit. Once revoked, no new permit is issued for three to six months. During that period, the facility cannot legally emit greenhouse gases or receive free allowances. Escalation: All fines double upon a first repeat violation and double again for each subsequent offence within three years. This is the provision that keeps compliance officers up at night, and rightly so. During the pilot phase, all fines are reduced by 80%. But even at the reduced rate, the financial exposure for a large emitter is far from negligible.   Carbon Credits and the National Offset System The Climate Law provides for a national carbon crediting and offsetting system overseen by the Directorate of Climate Change. This is a genuinely interesting area for forward-thinking companies, because it creates opportunities that go beyond mere compliance. From 2028 onward, regulated entities may use authorized domestic offset credits to cover up to 10% of their allowance surrender obligations. Credits can be generated from projects that verifiably reduce or remove greenhouse gas emissions, such as afforestation, renewable energy deployment, industrial efficiency upgrades, and carbon capture initiatives. Project developers must register with the national offset registry within prescribed timeframes, and fraudulent or erroneous project data will result in credit invalidation.   Here is why this matters commercially. If your company invests in a verified emission reduction project, say, a waste heat recovery system at one of your plants, you may be able to generate carbon credits that can either be used to meet your own compliance obligations or sold to other regulated entities that need them. That is a new revenue stream in a market that did not exist in Türkiye twelve months ago. The caveat: offset use is not permitted during the pilot phase. But that does not mean you should wait until 2028 to start developing projects. Credit registration takes time, verification processes must be established, and early movers will have an advantage when the market opens.   The EU CBAM We deliberately placed this section after the detailed ETS analysis because the CBAM interaction is, in our assessment, the single most important strategic dimension of the TR ETS for Turkish businesses engaged in EU trade. The EU Carbon Border Adjustment Mechanism began its financial implementation phase on 1 January 2026. Under CBAM, EU importers must purchase certificates reflecting the carbon cost embedded in imported goods. The mechanism currently covers cement, steel, aluminium, fertilizers, electricity, and hydrogen. Crucially, if an equivalent carbon price has been paid in the country of origin, the EU importer may deduct that cost from the CBAM obligation. The numbers are stark. Modeling conducted by the European Bank for Reconstruction and Development, cited in Türkiye’s Pre Accession Economic Reform Program, estimates that without a domestic ETS, the annual CBAM cost to Turkish industry would reach approximately €138 million in 2027 under a €75/tCO2 scenario. Under a €150/tCO2 scenario, those costs could climb to roughly €2.6 billion per year by 2032. Two point six billion euros. That is the cost of inaction. The TR ETS is designed to reduce that exposure significantly. Once allowance auctions commence and a meaningful domestic carbon price is established, Turkish exporters will be able to demonstrate that they have already paid a carbon cost, which can be deducted from CBAM liabilities. The government’s projections suggest CBAM related payments could drop to around €56 million in 2027 and €1.1 billion in 2032 with a functioning domestic ETS in place. However, during the pilot phase when all allowances are free, the effective domestic carbon cost is zero. That means EU importers of Turkish goods will still have to pay the full CBAM rate for now. The benefit materializes only as the system matures and auctioning begins. Companies that plan on the assumption that CBAM relief will arrive immediately are miscalculating.   9.1 Türkiye’s Own Border Mechanism: The SKDM Article 8 of the Climate Law also introduces the legal basis for a national carbon border adjustment mechanism, the Sınırda Karbon Düzenleme Mekanizması or SKDM. The Ministry of Trade is empowered to determine its scope, reporting requirements, and implementation. This is clearly modeled on the EU CBAM, and if implemented, it would impose carbon costs on goods imported into Türkiye from jurisdictions without equivalent carbon pricing. For importing businesses, this is worth monitoring closely. The secondary legislation has not yet been published, but the statutory authorization is in place, and there is genuine political momentum behind it. If your supply chain includes significant imports from countries without carbon pricing regimes, you should be conducting scenario analysis now.   Green Finance and Revenue Allocation The Climate Law dedicates future auction revenues exclusively to climate action and green transformation initiatives, with up to 10% earmarked for just transition measures targeting affected workers and communities. The law also promotes the development of green financial instruments, including sustainable bonds, green loans, and environmental insurance products. A Turkish Green Taxonomy is being developed alongside the ETS framework to classify sustainable economic activities. Companies whose projects qualify under the taxonomy may benefit from preferential financing terms and access to dedicated public funds. For businesses considering capital investment in lower-emission technologies or processes, the timing of these financial incentives is designed to coincide with the ETS transition, creating a window of opportunity. We should note that the practical impact of these financial mechanisms will depend heavily on the implementing regulations. The statutory framework is promising, but whether green finance instruments develop sufficient scale and accessibility to make a real difference for mid-market companies remains to be seen.   What You Should Be Doing Right Now Let us close with the practical takeaways. Based on our advisory work with companies navigating this transition, here are the priorities we would set for any business within or potentially within the TR ETS scope. Audit your MRV infrastructure. Not a quick review, but a genuine operational audit. Are your emission factor databases current? Is your fuel consumption data metered or estimated? Do you have staff who understand the verification process, or have you been outsourcing everything and hoping for the best? Fix gaps now, while the pilot phase penalties are still reduced. Model your CBAM exposure. If you export to the EU in any CBAM covered sector, quantify your annual CBAM liability under multiple carbon price scenarios. Understand when the domestic carbon price will begin to offset that liability, and plan your negotiating position with EU buyers accordingly. Some EU importers are already inserting CBAM-related clauses into supply contracts with Turkish producers. Explore offset opportunities. The 10% offset allowance post pilot may seem modest, but for a large emitter, 10% of annual surrender obligations can represent a significant volume of credits. Early investment in qualifying projects gives you both a compliance cushion and a potential trading asset. Monitor secondary legislation closely. The Climate Law is the framework. The operational details, including benchmarking methodologies, the national allocation plan, registry procedures, and SKDM rules, will be determined through Carbon Market Board decisions, EMRA regulations, and ministerial communiqués. Companies that wait for the final rules before starting preparation will find themselves behind. Review your supply contracts. Both as an exporter facing CBAM and as a potential importer under the future SKDM, your contractual framework needs to account for carbon costs. This includes pass-through mechanisms, reporting obligations, penalty allocation for noncompliance, and dispute resolution provisions specific to carbon regulatory requirements.   Final Thoughts Climate Law No. 7552 is not a signaling exercise. It is a detailed, enforceable piece of legislation with real institutional backing, clear timelines, and penalties that escalate with each violation. The TR ETS will reshape the competitive landscape for Turkish industry over the next decade, rewarding companies that invest in emissions management and penalizing those that treat compliance as an afterthought. The combination of domestic political commitment, EU accession alignment, and the immediate financial pressure of CBAM creates a convergence of incentives that makes delayed implementation unlikely. The companies that thrive in this new environment will be the ones that started preparing before they were forced to. We would encourage every business within the potential scope of the TR ETS to treat the pilot phase not as a trial run, but as the beginning of a permanent shift in how Türkiye regulates industrial emissions

A Legal Practitioner's Guide to Structuring Investments in Technology Ventures Introduction Over the past decade, the explosion of early-stage technology ventures, deep-tech start-ups, and platform-based business models has fundamentally redrawn the map of private capital deployment. Founders and fund managers alike have grown sophisticated in their understanding of valuation mechanics. Yet, in our experience advising both domestic and cross-border investment transactions, one instrument continues to be consistently misunderstood, misapplied, or entirely overlooked: the premium capital increase. Under Turkish Commercial Code No. 6102 ("TCC"), the mechanics of issuing shares above their nominal value provide a sophisticated, legally coherent framework that when properly structured serves simultaneously as a valuation tool, a governance instrument, a tax-efficient capital channel, and a signal of market credibility. This article explores those mechanics in depth, with particular attention to how premium issuances can be deployed strategically in technology investments, venture capital rounds, and emerging-market deal structures. Our objective is practical: to offer founders, investors, and in-house counsel a working-level guide to the use of share premiums not merely as an accounting entry, but as an active lever in deal architecture.   The Mechanics of Premium Issuance: What Actually Happens 1.1  The Anatomy of a Premium Share Every share issued by a joint-stock company (anonim şirket) carries a nominal value (itibari değer), which is the minimum statutory amount printed on the share certificate. Under TCC Article 347, shares may not be issued below this nominal value. However, where a company's enterprise value has materially outgrown its nominal capital, as is the norm in high-growth technology companies, issuing new shares at nominal value alone would produce an economically irrational and legally questionable outcome. In a premium issuance, the subscriber pays two distinct amounts: The nominal value — booked as an increase to the company's registered share capital (esas sermaye); and The premium (emisyon primi) — the excess over nominal value, which under TCC Article 519/2(a) is classified as a capital reserve and held separately from the company's distributable profits. This bifurcation is not merely an accounting convention; it is a legal architecture with real consequences for governance, distribution, and investor protection, each of which we examine below.  1.2  Cash Payment Before Registration: A Hard Rule Under the TCC, the nominal portion of subscribed shares may be paid in instalments—up to 25% at subscription and the remainder within 24 months following registration (TCC Art. 344). This grace period, however, does not apply to premiums. Pursuant to TCC Article 461/2 and long-standing registry practice, the premium portion must be paid in full, in cash, prior to the registration of the capital increase with the trade registry. In practice, this means that when advising a client on a Series A or later-stage round, we invariably structure the premium payment mechanism in the investment agreement to include a timing covenant: premium funds are wired to the company's bank account (and a bank confirmation letter obtained) before the capital increase application is lodged with the relevant trade registry. Any deviation from this sequence creates a registration risk that can unwind the entire transaction.  1.3  The Board Report Requirement: Transparency as Deal Currency TCC Article 461/2 mandates that the board of directors prepare and register a detailed report justifying the premium amount and its basis of calculation. Far from a bureaucratic formality, this document serves a critical function in technology investment contexts: it constitutes the company's public-record explanation of how enterprise value was determined. A well-drafted board report will typically reference the valuation methodology applied (DCF, comparables, precedent transactions), the identity and credentials of any third-party valuation expert engaged, the company's financial KPIs at the time of the round, and the rationale for the premium relative to nominal capital. Investors, regulators, and future acquirers will scrutinize this document. An anemic or boilerplate board report invites challenge. Conversely, a rigorous report can pre-empt disputes among shareholders and provide comfort to institutional investors conducting legal due diligence.   Premium Issuances as a Deal Structuring Lever  2.1  Maintaining Founder Control Without Sacrificing Capital One of the most consequential and frequently misunderstood features of premium share issuances is their effect on the governance and ownership architecture of a company. Because the premium is excluded from the nominal capital base, it does not create additional voting shares. Consequently, new investors entering at premium pricing receive economic exposure commensurate with the company's actual value, without disproportionately eroding the founders' control position. To illustrate with a concrete scenario: A technology company has a registered nominal capital of TRY 100,000 (100,000 shares at TRY 1 nominal). Over three years of operation, internal valuation exercises and third-party appraisals establish an enterprise value of TRY 10,000,000. A VC fund proposes to invest TRY 2,000,000 for a 15% equity stake. Issuing 17,647 new shares at nominal value (TRY 1) would raise only TRY 17,647, a fraction of the intended investment. To raise TRY 2,000,000 via a premium issuance for a 15% stake, the company instead issues 17,647 new shares at TRY 113.35 each (TRY 1 nominal + TRY 112.35 premium). Nominal capital increases by TRY 17,647; the remaining TRY 1,982,353 flows into capital reserves as share premium. Result: The fund acquires 15% of equity, the founders retain 85%, governance ratios are preserved, and the balance sheet reflects TRY 2,000,000 in new equity at fair value. This outcome cannot be achieved through a nominal-only capital increase. It is the premium mechanism that makes precision-engineered ownership structures possible.  2.2  Anti-Dilution Protections and the Role of Premium Pricing In multi-round financing, premium issuances at successive valuations function as a natural anti-dilution mechanism for early investors, provided the rounds are structured at increasing per-share prices. This pricing progression, sometimes called a "step-up" structure, ensures that each round's premium reflects the value created since the prior round. However, counsel must be attentive to the inverse scenario: a "down round," in which a subsequent capital increase is carried out at a lower per-share price than the preceding round. Under Turkish law, a down round does not automatically trigger statutory protections for prior investors, unlike in some common law jurisdictions where full-ratchet or weighted-average anti-dilution provisions may be implied or contractually standard. In Turkish practice, such protections must be explicitly negotiated and embedded in the shareholders' agreement or the articles of association. Our standard advice to both founders and investors is to address anti-dilution mechanics at the outset, not reactively during a distressed round, and to align those mechanics with the share premium regime under TCC.  2.3  Pre-Emption Rights and the Waiver Framework Premium capital increases are subject to the general pre-emption right (rüçhan hakkı) regime under TCC Article 461. Existing shareholders have a statutory right to subscribe for new shares pro rata to their current holdings. In a technology investment context, this right may be waived fully or partially by general assembly resolution, typically to admit a new institutional investor or strategic partner. The combination of a premium issuance with a targeted pre-emption waiver is one of the most frequently used structural tools in venture capital transactions under Turkish law. It permits a clean, investor-specific entry at a price reflecting fair market value, without requiring complex side arrangements. Counsel should ensure that the waiver resolution is adopted with the appropriate majority, that the premium amount is documented in the board report, and that the capital increase is registered within the statutory timelines to avoid any lapse of validity.   III.  The Authorized Capital System: Agility for High-Growth Companies For technology companies anticipating multiple funding rounds within a short period, the kayıtlı sermaye sistemi (authorized capital system) offers a significant structural advantage. Under TCC Articles 460–463, a company may authorize its board of directors, via a pre-approved upper capital limit, to carry out capital increases without convening a general assembly each time. Critically, this authorization must explicitly cover premium issuances. A blanket board authority to increase capital does not, without more, extend to premium pricing. TCC Article 480 requires that the articles of association (or the general assembly resolution granting authority) specify that the board may issue shares at a premium and, ideally, define the pricing methodology or delegate this to the board's discretion within defined parameters. In practice, we advise clients adopting the authorized capital system to draft their articles of association with sufficient precision to enable board-level premium issuances without the delay of a general assembly convocation, while ensuring the authorization is not so broad as to expose the company to regulatory challenge or minority shareholder claims. This balance is particularly important for start-ups that have venture or growth equity investors on their capitalization tables.   Tax and Regulatory Dimensions  4.1  Corporate Taxation: The Non-Income Character of Premiums From a tax perspective, the share premium does not constitute income for the issuing company and is therefore not subject to corporate income tax at the point of receipt. This is a structural advantage over debt financing (where interest is income-neutral for the borrower but creates tax exposure for the lender) and over profit-based distributions (which are subject to withholding tax at source). However, distribution of share premiums triggers withholding tax obligations. Pursuant to the Turkish Revenue Administration's private ruling of 20 October 2015 (No. 62030549-125-2014/1054), premiums may only be distributed to shareholders after the company has satisfied the legal reserve threshold under TCC Article 519. Distributions before that threshold is met are impermissible under the TCC, and any such distribution may expose company officers to personal liability. For investment structures where liquidity events (exits, secondary sales, dividend recapitalizations) are anticipated within a defined timeline, the distribution mechanics of share premium reserves must be modeled carefully at the time of the initial investment,  not discovered at the moment of exit. 4.2  Registry Fees Trade registry fees in Turkey are calculated on the basis of the increase in nominal capital, not the total subscription price, including premium. In a Series B transaction where, for example, TRY 50,000,000 is raised against a nominal capital increase of TRY 500,000, the registry fee is assessed only on TRY 500,000. Over multiple rounds, this differential compounds into material cost savings and supports the economic efficiency of the premium structure. 4.3  Capital Markets Law Overlay for Public Companies and Pre-IPO Structures For companies contemplating a public offering, whether immediately or as a medium-term liquidity event, the Capital Markets Law (CML) and Capital Markets Board (CMB) regulations impose an additional layer of requirements on premium issuances. CML Article 12/1 mandates full cash payment of the subscription price (including any premium) prior to registration. The CMB further retains authority to require premium issuances where the market or book value of a publicly held company's shares significantly exceeds nominal value. In pre-IPO rounds, structuring the company's capital increases as premium issuances creates a clean, auditable chain of equity value that simplifies the prospectus preparation process and supports the pricing narrative for the offering. Conversely, a history of nominal-only capital increases that do not track enterprise value growth may complicate CMB review and require retroactive valuation explanations.   Deploying the Premium Mechanism Across Investment Themes  5.1  Deep Tech and IP-Intensive Companies In companies whose enterprise value is substantially driven by intellectual property (software platforms, biotech, defense technology, AI models) the gap between nominal capital and fair market value tends to be extreme, often by orders of magnitude. In these cases, the premium issuance mechanism is not merely preferable: it is practically indispensable. Any attempt to raise significant external capital through nominal-only issuances in such companies would result in a dramatic and unjustifiable transfer of value from existing shareholders to incoming investors. A further consideration unique to IP-intensive companies is the treatment of intangible assets on the balance sheet. Where IP has been contributed as an in-kind capital item (ayni sermaye), the valuation of that contribution must comply with TCC Article 343 requirements (expert appraisal by court-appointed expert). Premium issuances layered on top of in-kind capital contributions require careful sequencing to ensure that the appraisal timeline does not create registration delays for the cash premium component.  5.2  Platform and Network-Effect Businesses Marketplace businesses, SaaS platforms, and other network-effect companies often show negative or minimal earnings in early stages while carrying substantial enterprise value driven by user growth, GMV, or ARR multiples. Investors entering such companies face a valuation challenge: how do you price equity into a company with no profits and, potentially, negative net assets on a book-value basis? Premium capital increases offer a legally coherent answer. The premium is anchored to enterprise value, not book value, and can be justified in the board report by reference to forward-looking metrics commonly used in technology valuation (ARR multiples, platform engagement scores, total addressable market estimates). The reserve created by the premium then functions as a financial cushion that absorbs early-stage losses without triggering the capital impairment rules that would otherwise require a capital reduction. 5.3  ESG and Impact Investments An underappreciated application of the premium mechanism is in impact investment and ESG-aligned financing structures. Where a company commands a valuation premium precisely because of its sustainability credentials, social impact metrics, or green certification, those intangible value drivers can and should be reflected in the premium pricing. The board report becomes an opportunity to articulate the ESG value thesis in legal form, a document that, once registered, constitutes part of the public record. As institutional investors increasingly adopt ESG mandates and as regulatory frameworks for sustainable finance continue to evolve, the ability to document ESG value creation through the capital increase record will become more important.   Legal Risks and How Practitioners Manage Them 6.1  The Overvaluation Risk The most significant legal risk in premium issuances is overvaluation: setting the premium at a level that cannot be substantiated by the company's actual financial position or market comparables. If challenged by minority shareholders, creditors, or regulators, an overvalued premium may expose the board members to liability under TCC Article 549 (liability for misleading capital increase documents) and, in extreme cases, result in the voidance of the capital increase itself. Mitigation requires three things: a credible valuation methodology, documented in the board report; an independent valuation opinion from a reputable third party wherever the transaction size warrants it; and a legal opinion confirming procedural compliance of the capital increase steps. In cross-border transactions involving foreign institutional investors, the valuation documentation must typically also satisfy the due diligence standards of the investor's home jurisdiction. 6.2  The Thin Capitalization and Leverage Risk Premium capital reserves recorded under TCC Article 519 are subject to restricted use: they may only be utilized to cover losses, maintain operations, or prevent layoffs, until the aggregate total of all legal reserves under TCC Article 519 (encompassing both the mandatory profit-based reserves under Article 519/1 and share premium reserves under Article 519/2) exceeds 50% of the company’s nominal capital, at which point the excess portion becomes freely usable. Importantly, this threshold is assessed on a cumulative basis across all legal reserve categories, not on the share premium reserve in isolation. Importantly, this threshold is assessed on a cumulative basis across all legal reserve categories, not on the share premium reserve in isolation. Companies that treat premium reserves as freely deployable working capital, without accounting for this restriction, may find themselves in a technical legal compliance breach that complicates future audits, financing, or M&A transactions. Practitioners advising companies with large premium reserves should map the statutory constraints early and maintain clear internal documentation of how reserves are being applied, ensuring alignment with the permitted uses under the TCC. 6.3  Cross-Border Structuring Considerations Technology start-ups increasingly receive investment from funds domiciled in the EU, UK, US, or Gulf states. In such transactions, the Turkish premium capital increase must be reconciled with the foreign investor's accounting framework (typically IFRS or US GAAP) and the fund's regulatory requirements. Share premium reserves are generally recognized under IFRS and US GAAP as additional paid-in capital, which reduces reconciliation friction. However, where a foreign investor requires that the Turkish company establish a holding structure in a third jurisdiction (e.g., the Netherlands, Luxembourg, or the DIFC), the premium issuance at the Turkish operating company level must be replicated or reflected at the holding level in a manner consistent with both Turkish and foreign law requirements. This dual-layer premium structuring is a complex but increasingly standard feature of international venture capital transactions involving Turkish portfolio companies.   VII.  Practitioner's Checklist: Structuring a Premium Capital Increase Based on our experience in advising both issuers and investors across dozens of technology financing transactions, the following sequence represents best practice for executing a premium capital increase: Valuation anchor. Commission or obtain a valuation opinion from an independent financial advisor. Define the methodology (DCF, market comparables, precedent transactions) and ensure it is defensible to minority shareholders and regulators. Articles of association review. Confirm whether the articles permit premium issuances (or require amendment). If the authorized capital system is in use, verify that board-level authority expressly extends to premiums. Corporate resolution. Adopt a general assembly or board resolution (depending on the applicable system) authorizing the capital increase at the specified premium. Include pre-emption waiver provisions if required to admit a new investor. Board report. Prepare a detailed board report in compliance with TCC Article 461/2. Reference the valuation methodology, the premium calculation, and the intended use of the capital raised. Payment before registration. Ensure full premium payment is received and confirmed by bank letter prior to lodging the capital increase application with the trade registry. Registry filing and announcement. File the capital increase documents with the relevant trade registry. Upon registration, the board report is publicly announced via the Turkish Trade Registry Gazette. Post-closing documentation. Update the share register, issue new share certificates or dematerialized share records as applicable, and file required notifications with the Revenue Administration if the transaction triggers any reporting obligations. Shareholders' agreement alignment. Ensure the shareholders' agreement (or investment agreement) is updated to reflect the new capitalization table, any anti-dilution mechanics, governance rights of new investors, and the treatment of premium reserves in any future liquidation or exit scenario.   Conclusion The share premium capital increase is, at its core, a legal instrument. But in the hands of skilled practitioners and sophisticated investors, it becomes something considerably more: a tool for aligning economic value with legal structure, preserving founder control, attracting institutional capital, and building a defensible equity narrative for the lifecycle of a technology venture. Turkish commercial law provides a robust, if sometimes underutilized, framework for premium issuances. The companies and investors who master this framework gain a genuine competitive advantage: in capital efficiency, in governance precision, in regulatory credibility, and in the quality of the legal architecture underpinning their growth. As practitioners, our role is to ensure that this framework is not merely technically complied with, but actively deployed as the strategic lever it was designed to be.

Security Package Structuring Under the New Licensing Regime A Practitioner’s Guide for Lenders, Sponsors, and Investors   Introduction Türkiye’s renewable energy sector has entered a new and remarkably dynamic phase. The country’s ambition to more than double its wind capacity and quadruple its solar capacity by 2035, combined with a net zero target for 2053, has created an environment in which project finance transactions are becoming larger, more complex, and more demanding in terms of legal structuring. As of 2025, Türkiye ranks among the top five European countries in installed renewable capacity and continues to attract significant attention from both international development finance institutions and commercial lenders. At the same time, the regulatory landscape has undergone substantial transformation. The amendments introduced in the last quarter of 2025, the enactment of Law No. 7554 (commonly referred to as the “Super Permit” legislation) in July 2025, and the continued evolution of EMRA’s licensing framework have fundamentally reshaped the way renewable energy projects are developed, financed, and secured in this jurisdiction. For those of us advising on these transactions daily, the interplay between the new licensing rules and the requirements of a bankable security package has become one of the most critical areas of legal practice in the Turkish energy market. This article draws on our experience in structuring and negotiating project finance transactions across the wind, solar, and hybrid segments in Türkiye. We aim to provide a practical, grounded analysis of how security packages should be approached under the current regime, with particular attention to the issues that matter most to lenders and their counsel.   The Evolving Licensing Framework: What Has Changed To properly structure security in a Turkish renewable energy project financing, one must first understand the licensing architecture and the recent shifts within it. The two-tier system of preliminary licence ("ön lisans") followed by a generation licence ("üretim lisansı") remains the backbone of the regulatory framework under the Electricity Market Law No. 6446. However, the practical operation of this system has been significantly refined. One of the most consequential changes introduced by the December 2025 amendments is the new deadline regime for licence transfers. EMRA approval for transfers of licensed generation facilities now comes with a mandatory completion window, which cannot be shorter than six months. If the parties fail to complete the transfer within this period, the approval lapses automatically. This is a critical consideration for lenders structuring step in rights, since the enforceability of share pledge arrangements and the ability to substitute sponsors ultimately depend on the transferability of the underlying licence. The harmonisation of YEKA (Renewable Energy Resource Area) project timelines with general electricity market licensing rules is another meaningful development. Previously, YEKA projects operated under a somewhat parallel regulatory universe, with their own extension mechanisms and timelines. The 2025 amendments have brought these projects into closer alignment with the standard regime, including the notable change that extensions of preliminary licence periods for YEKA projects are no longer automatic but require the affirmative consent of the Ministry of Energy and Natural Resources. For lenders to YEKA projects, this introduces a degree of discretionary risk that was not present before. The “Super Permit” legislation under Law No. 7554 merits particular attention. This law, which took effect in July 2025, grants EMRA the authority to conduct urgent expropriation procedures for renewable energy investments through the end of 2030, with a possible five-year extension by presidential decree. It also extends the 85% discount on permit, lease, and easement fees to generation facilities commissioned before 31 December 2030 (previously, the cutoff was 2025). These provisions are designed to remove land acquisition bottlenecks and reduce costs, but they also create new dynamics for security structuring, particularly around land rights and the enforceability of mortgages on project sites. On the unlicensed generation side, facilities with installed capacity of 5 MW or less continue to benefit from a lighter regulatory framework. The November 2025 amendments clarified the technical review procedures for these projects, requiring centralised evaluation through the YEKİS monitoring system with strictly defined deadlines. While unlicensed projects typically involve simpler financing structures, the tightening of procedural requirements means that lenders should no longer assume that the regulatory risk profile is negligible.   The Architecture of a Turkish Project Finance Security Package Turkish law does not recognise the concept of a floating charge over all present and future assets as it exists in common law jurisdictions. Security must therefore be structured on an asset-by-asset basis, with each element of the package requiring its own perfection steps and documentation. This reality makes the construction of a comprehensive security package in Türkiye both technically demanding and strategically important. We set out below the principal components of a well-structured security package in a Turkish renewable energy project financing, drawing on current market practice and the latest regulatory requirements.   Share Pledges and Sponsor Security The pledge over the shares of the project company (the SPV) is typically the cornerstone of the security package. For joint stock companies ("anonim şirket"), which are the standard vehicle for licensed energy projects, perfection requires execution of a written pledge agreement, endorsement of the share certificates (or temporary certificates), physical delivery of those certificates to the lenders or their security agent, and recording of the pledge in the company’s share ledger. Where the SPV is structured as a limited liability company, the pledge agreement must additionally be notarised. The share pledge is the primary mechanism through which lenders exercise control over a distressed project. Upon an event of default, enforcement typically proceeds through public auction under the Enforcement and Bankruptcy Law No. 2004. However, the Movable Pledge Law No. 6750 also opens the possibility for the pledgee to request transfer of ownership of the pledged shares, or to assign the receivable under the pledge to a licensed asset management company. These alternative enforcement routes, while not yet extensively tested before the courts, are increasingly being documented in project finance agreements. One must also bear in mind the regulatory overlay. Any change of control in a licensed generation company requires EMRA notification (and, depending on the threshold, approval). The 2025 amendments have extended this notification obligation to all licence holders whose tariff is not subject to regulation, not just generation licence holders. Lenders should therefore ensure that their step-in and enforcement provisions are structured to allow sufficient time for regulatory approvals, particularly given the new mandatory completion windows for licence transfers.   Mortgages Over Project Land and Real Property Mortgages over the project site are a standard feature of any renewable energy financing. Under Turkish law, a mortgage must be executed before the relevant land registry ("tapu müdürlüğü") and registered to be perfected. Türkiye employs a fixed rank system for mortgages: the creditor holding the highest-ranked mortgage is paid first upon foreclosure, regardless of the date the security interest was actually created. This makes the priority of lender mortgages a matter of considerable commercial importance. For foreign currency-denominated loans (which remain common in project finance), the mortgage amount may be expressed in the relevant foreign currency, which avoids the currency mismatch that would otherwise arise if the mortgage were denominated in Turkish Lira. This is one of the exceptions to the general rule requiring mortgage amounts to be stated in Lira. The Super Permit legislation introduces new considerations for mortgage structuring. Where EMRA exercises its urgent expropriation powers to acquire privately owned land for a renewable energy project, the nature of the project company’s interest in the land may shift from ownership to a right of use or easement. Lenders will need to confirm that their mortgage (or, where applicable, their usufruct pledge) properly covers the specific form of land interest that exists following any expropriation or administrative reallocation. In our experience, this is an area where careful title due diligence at the outset pays significant dividends.   Pledges Over Movable Assets and Equipment Wind turbines, solar panels, inverters, transformers, and balance of plant equipment represent a substantial portion of the capital value in any renewable energy project. Pledges over these assets are governed primarily by the Movable Pledge Law No. 6750, which introduced a registry-based system for commercial movable pledges. Perfection requires execution of a notarised pledge agreement and registration with the TARES electronic movable pledge registry. The law also permits the pledge of entire commercial enterprises, which can capture a broad range of present and future assets (though not immovable property). An important practical point: certain categories of movables, including ships, aircraft, motor vehicles, trademarks, and mining rights, fall outside the scope of the Movable Pledge Law and require registration with their own specialised registries. While these exclusions are less commonly encountered in renewable energy projects, they become relevant in hybrid or multi-purpose facilities.   Assignment and Pledge of Receivables The assignment of receivables under key project contracts is one of the most commercially significant elements of the security package. This typically covers revenues under offtake agreements or power purchase agreements, payments under EPC and O&M contracts, insurance proceeds, and any other material income streams of the SPV. Under Turkish law, the assignment of receivables requires a written agreement and takes effect without the debtor's consent. However, as a matter of prudent practice, lenders invariably require notification of the debtor and an acknowledgement of the assignment. Without such notice, a debtor that makes payment in good faith to the original creditor (the project company) may be discharged from its obligation, which obviously undermines the purpose of the assignment from the lender’s perspective. Future receivables are also assignable under Turkish law, provided that they are sufficiently identified or identifiable at the time of assignment. This is particularly relevant for project finance, where the revenue stream from a power plant may extend decades into the future. A valid assignment automatically transfers all ancillary rights attached to the assigned receivable, including any security interests that secure it. In the context of the updated YEKDEM (Renewable Energy Sources Support Mechanism), lenders should pay close attention to the revised settlement methodology. The 2025 amendments clarified that energy stored under the YEKDEM framework and fed into the grid after the facility exits the support scheme will not count toward YEK settlement. This may affect projected revenue streams and, consequently, the value of assigned receivables for lenders relying on YEKDEM income as part of their base case.   Account Pledges and Cash Waterfall Mechanisms Control over the project company’s bank accounts is central to any project finance security package. Account pledges are perfected through execution of a pledge agreement and notification to (and acknowledgement by) the relevant account bank. The bank then records the pledge in its internal systems, confirming the lenders’ priority. In practice, the cash waterfall is typically documented through a combination of the account pledge agreements and a detailed accounts agreement or common terms agreement. The waterfall governs the priority of disbursements from project revenues: first to operating expenses, then to debt service, then to maintenance reserves, and finally (if surplus remains) to equity distributions. Lenders normally require exclusive control over the project’s banking arrangements, which is achieved by requiring all project revenues to flow into pledged accounts maintained with an acceptable account bank.   Insurance Assignments and Creditor Protections Insurance is a critical but sometimes underappreciated element of the security package. Under Turkish Insurance Law No. 5684, insurable interests located in Türkiye belonging to Turkish residents must, as a general rule, be insured by insurance companies operating in Türkiye. However, reinsurance abroad is standard practice and both original policies and reinsurance contracts are assignable. Market standard protections include recording the lenders or security agent as loss payee and, where appropriate, as additional insured or co-insured. Restrictions on cancellation or material amendment without prior notice to lenders are also customary. Insurance proceeds from material claims should be directed into controlled accounts and applied through the agreed cash waterfall. Importantly, Turkish law permits insurance proceeds to be payable to, and security to be created for the benefit of, foreign secured creditors, which remains a critical consideration in cross-border financings.   The Parallel Debt and Security Agent Structure Turkish law treats pledges and mortgages as accessory ("ancillary") security interests, meaning that the holder of the security right must also be the creditor of the secured obligation. This principle presents a structural challenge in syndicated loan transactions, where multiple lenders share a common security package held by a single agent. The solution that has become market standard in Türkiye is the parallel debt structure. Under this arrangement, the project company acknowledges an independent, abstract obligation (the “parallel debt”) in favour of the security agent, in an amount equal to the aggregate obligations owed to all lenders under the facility agreement. The security interests are then established to secure this parallel debt, with the security agent as the direct creditor and security holder. While the parallel debt mechanism is now deeply embedded in Turkish project finance practice, it has not yet been definitively tested before the Turkish courts. In our view, the structure is consistent with the principles of Turkish civil law: the certainty of the pledged claim is satisfied because the parallel debt arises from a specific legal transaction, and the accessory principle is preserved because the security agent is both the creditor and the security holder. Nevertheless, prudent counsel should be transparent with clients about the residual enforceability uncertainty and should ensure that parallel debt provisions are carefully drafted to withstand judicial scrutiny.   Direct Agreements, Step In Rights, and Substitution Direct agreements between lenders and key project counterparties (the EPC contractor, O&M provider, offtaker, and sometimes the relevant governmental authority) are a fundamental part of the security architecture. Their purpose is to give lenders the right to step in and cure defaults under the relevant project contracts before those contracts can be terminated, and to facilitate the substitution of the project company or its sponsors if enforcement becomes necessary. The enforceability and practical utility of step in rights in Türkiye depend heavily on the transferability of the underlying licence. Under the current regime, any transfer of a licensed generation facility requires EMRA approval, and the 2025 amendments have imposed strict completion deadlines. Lenders should therefore negotiate step in and substitution mechanisms that explicitly account for the regulatory approval timeline, including standstill provisions that prevent counterparties from terminating project agreements while the EMRA approval process is underway. For YEKA projects, an additional layer of complexity arises from the relationship between the YEKA contract and the licence. If the Ministry terminates a YEKA contract and notifies EMRA, both the preliminary licence and the generation licence may be revoked. This means that the value of step in rights in YEKA projects is directly linked to the stability of the YEKA contractual framework. Lenders to these projects should seek robust cure periods and consultation rights before any ministerial termination can take effect.   Perfection, Priority, and Enforcement: Practical Considerations Each element of the security package carries its own perfection requirements, and failure to observe these formalities can be fatal to the enforceability of the security. We summarise the key points below. For share pledges over joint stock companies, the sequence is: written agreement, endorsement, physical delivery of certificates, and entry in the share ledger. For account pledges, the critical step is notification to and acknowledgement by the account bank. Movable pledges under the Movable Pledge Law require notarisation and registration in TARES. Mortgages require execution before and registration at the land registry. One favourable aspect of Turkish project finance practice is the blanket stamp duty exemption applicable to security documents where one of the parties qualifies as a financial institution. This means that, in most cases, there are no meaningful duties or fees payable to perfect security interests in project finance transactions, a material cost saving compared to many other jurisdictions. On enforcement, the general rule under Turkish law is that secured creditors have a right of preference over the sale proceeds of the secured assets. However, certain public receivables (such as tax claims) may rank ahead of or alongside the lender’s security in a bankruptcy scenario. Additionally, lenders face clawback risk: other creditors of an insolvent debtor may apply to courts to set aside certain transactions entered into during the suspect period before insolvency. Careful structuring and timing of security perfection can help mitigate these risks, but they cannot be entirely eliminated.   YEKDEM, Revenue Risk, and the Impact on Security Valuation The commercial viability of any renewable energy project finance transaction ultimately depends on the predictability of the revenue stream. In Türkiye, the YEKDEM feed in tariff mechanism has been the primary revenue support instrument for renewable projects. Facilities commissioned before 30 June 2021 benefit from USD denominated feed in tariffs for a period of ten years. Those commissioned after that date are subject to a revised mechanism with TL denominated tariffs adjusted quarterly based on a basket of indices (PPI, CPI, USD, and EUR), subject to USD indexed caps. The new YEKA tender framework introduces further variations. For projects awarded under the latest YEKA tenders, a minimum feed in tariff of USD 4.95 per kWh applies for the first five to six years, followed by a fixed rate for the subsequent twenty years, with the remaining licence period subject to free market conditions. These structures offer a degree of revenue visibility, but they also introduce step down risks and transition periods that must be carefully modelled in the financial projections underpinning any lending decision. From a security perspective, the value of assigned receivables is only as strong as the revenue certainty behind them. Lenders should ensure that their base case financial models conservatively reflect the applicable tariff structure, including any phase out or transition provisions. Where the project is approaching the end of its YEKDEM support period, the shift to merchant risk is a material factor that will affect both the terms of the financing and the structure of the security package.    ESG, Green Finance, and Evolving Compliance Expectations The green finance dimension of Turkish renewable energy project finance has matured significantly. Türkiye’s sustainable finance taxonomy, which is being developed in alignment with the EU taxonomy framework, will require institutions subject to sustainability reporting rules to report taxonomy aligned revenue and capital expenditures from 2026 onwards, with mandatory disclosures following from 2027. This alignment is expected to facilitate cross border green investments and should, over time, reduce the cost of capital for compliant projects. International lenders increasingly require compliance with the Equator Principles and IFC Performance Standards as a condition of financing. Adherence to these frameworks involves environmental impact assessments, stakeholder engagement, biodiversity management, and ongoing monitoring and reporting obligations. While these requirements add to the upfront cost of project development, they also serve a risk mitigation function. Projects that meet international ESG standards are less likely to face regulatory enforcement actions, community opposition, or reputational damage, all of which can materially affect the value of the lender’s security. The proposed streamlining of Environmental Impact Assessment procedures under the Super Permit framework, which envisions EIA completion within three to six months and the possibility of conducting other permit applications simultaneously, has drawn some criticism from environmental organisations. Lenders should be mindful that expedited EIA processes may increase the risk of subsequent legal challenges to project permits, which could in turn affect the stability of the licence and the enforceability of security interests tied to it.   Structuring Recommendations for Market Participants Based on our experience across a wide range of Turkish renewable energy financings, we would highlight several key structuring considerations for market participants navigating the current environment. First, the new deadline regime for licence transfers demands that step in and enforcement provisions in facility agreements and direct agreements be carefully calibrated to the regulatory timeline. Lenders should build in sufficient buffer periods and ensure that standstill mechanisms prevent premature termination of project contracts while EMRA approvals are pending. Second, the extension of the commissioning deadline for the 85% permit fee discount to 2030 under Law No. 7554 creates opportunities for projects to benefit from reduced land costs, but it also means that lenders should verify the precise nature of the project company’s land interest (ownership, leasehold, easement, or right of use) and tailor their mortgage or pledge documentation accordingly. Third, the evolving YEKDEM and YEKA tariff structures require lenders to model revenue streams with a high degree of granularity. Security packages should be stress tested against downside scenarios, including tariff step downs, currency fluctuations, and the transition from supported to merchant pricing. Fourth, the parallel debt structure, while well established in practice, should be documented with meticulous care. Given the absence of definitive court precedent, the drafting of the parallel debt clause, the abstract acknowledgement of debt, and the related security documents should leave no room for ambiguity about the independent nature of the security agent’s claim. Fifth, with Türkiye’s sustainability taxonomy and mandatory ESG disclosures on the horizon, sponsors and lenders alike should proactively integrate ESG compliance into their project development and financing frameworks. Projects that are taxonomy aligned from the outset will find it materially easier to access green bonds, concessional finance, and international development bank support.   Conclusion Türkiye’s renewable energy sector stands at a point of genuine inflection. The regulatory reforms of 2025, the Super Permit legislation, and the continuing evolution of the licensing and incentive frameworks have created a more structured but also more demanding environment for project finance. For lenders, the quality of the security package is not merely a legal formality; it is the foundation upon which the entire risk allocation of the transaction rests. We believe that the Turkish market offers compelling opportunities for well-structured renewable energy investments. The key to realising those opportunities lies in rigorous legal analysis, careful coordination between regulatory, corporate, and financing workstreams, and a willingness to engage with the nuances of a legal system that, while civil law in origin, has developed its own distinctive project finance practice. Those who take the time to get the structuring right will find that Türkiye rewards diligence with bankable, enforceable, and commercially sound transactions.

A. Introduction The Turkish Commercial Code ("TCC") No. 6102 and the Capital Markets Law ("CML") No. 6362 regulate the right of a dominant shareholder to remove minority shareholders from a company. In foreign legal systems, this process is often referred to as a "squeeze-out" or "freeze-out." The TCC addresses this under Article 208 as the "right to purchase," while the CML refers to it in Article 27 as the "right to remove from the partnership." Additionally, Article 141 of the TCC provides justification for this mechanism as the "removal of a partner through a merger." The squeeze-out mechanism grants dominant shareholders, holding a qualified majority, the right to purchase the shares of minority shareholders at a fair price, thereby expelling them from the company. The primary aim is to prevent decision-making deadlocks caused by minority shareholders and enhance the company’s operational efficiency. This mechanism is particularly critical for ensuring agility and effectiveness in large-scale corporate structures. The right of the dominant shareholder to remove minority shareholders is anchored in corporate group law and merger and acquisition frameworks. In group company law, this right ensures effective coordination among affiliated companies and facilitates centralized management. Within mergers and acquisitions, it streamlines public tender offers and accelerates acquisition processes by reducing resistance from minority shareholders. These frameworks share a common focus on overcoming obstacles caused by minority shareholders, enhancing strategic alignment, and enabling swift execution of corporate decisions.   B. Legal Assessment of the Squeeze-Out Concept The squeeze-out mechanism under Turkish law is grounded in the concept of "dominance," setting it apart from traditional expulsion mechanisms. Unlike international systems where squeeze-outs often lack this requirement, TCC Article 208 necessitates just cause to justify expulsion. In contrast, CML Article 27, applicable to publicly traded companies, omits this requirement, enabling a more flexible approach focused on corporate efficiency. This distinction highlights the differing policy objectives between the two regulations: while the TCC emphasizes shareholder rights and fairness, the CML prioritizes governance and operational efficiency.   C. Conditions for Exercising the Dominant Shareholder’s Right Conditions Under TCC Article 208 The right to expel, regulated under TCC Article 208, applies to capital companies and is a provision related to group company law. This regulation grants the dominant company the right to expel minority shareholders by purchasing their shares under certain conditions. According to TCC Article 208, in order for the right to be exercised, the dominant company must: Hold at least 90% of the company’s capital and voting rights, either directly or indirectly. Demonstrate just cause for the expulsion, such as obstruction of operations, violations of good faith, or actions that disrupt company management. The 11th Civil Chamber of the Court of Cassation, in decision 2019/915 E. and 2019/7720 K., confirmed that this right is exclusive to group companies and cannot be invoked by individual shareholders. Similarly, in decision 2021/4719 E. and 2022/9173 K., the court ruled that the right is available only to corporate shareholders. Just Cause in Turkish Law TCC Article 208 introduces the concept of just cause as a unique condition. Just causes include: Actions violating good faith principles. Obstruction of the company’s basic operations. Harmful or reckless behavior disrupting corporate sustainability (Harun Keskin, Hakim Pay Sahibinin Azınlığı Şirketten Çıkarma Hakkı (Squeeze-Out), 2022). In this context, just causes include situations where minority shareholders engage in conduct that endangers the sustainability of the company’s operations or violate the principles of honesty and trust. Minority shareholders obstructing the company’s basic functions, harming its commercial activities, or excessively disrupting management may be expelled. This just cause condition ensures stability in intra-company relations and preserves managerial peace. Therefore, the right to expel can only be exercised against minority shareholders whose behavior disrupts the company’s operations, violates principles of good faith, and harms sustainability. Scope and Conditions Under CML Article 27 CML Article 27 grants the dominant shareholder of a publicly traded joint-stock company the right to expel minority shareholders if they reach a qualified majority through a public tender offer or other means. Unlike TCC Article 208, CML Article 27 does not require just cause, making it more flexible. Under CML, expulsion occurs by canceling minority shareholders’ shares, with the dominant shareholder purchasing them through newly issued shares. A key distinction is that under CML Article 27, the expulsion right does not require a public tender offer. The dominant shareholder may acquire the necessary stake through a tender offer or acting in concert with others. According to the Communiqué on Squeeze-Out and Sell-Out Rights II-27.3 (“Communiqué”) Article 3/(c), the dominant shareholder can be a natural person or a legal entity, offering flexibility. Article 4 requires holding at least 98% of voting rights to exercise the expulsion right. The threshold must be met before exercising this right, and shares based on usufruct or call options are excluded from this calculation. If the 98% threshold is reached, the dominant shareholder must: Make a public announcement. Prepare an appraisal report within one month and disclose a summary. Complete the expulsion process within two months, paying the share price in compliance with the Communiqué’s provisions.   D. Exercise of the Right and Determination of the Expulsion Price TCC Article 208 provides two methods for determining minority shares' value: Stock Market Value: If available, market price applies. Actual Value: If no market price exists, shares are valued based on net asset value. Unlike TCC Article 208, which requires a court decision, CML Article 27 requires a Capital Markets Board-determined period for share cancellation and issuance of new shares.   E. Minority Shareholder’s Right to Exit TCC Article 202/1(b) protects minority shareholders by ensuring an exit if the dominant shareholder misuses control and causes financial harm. Minority shareholders can: File a compensation lawsuit. Request the court to compel the dominant shareholder to purchase their shares.   F. Expulsion from the Company in Cases of Termination for Just Cause TCC Article 531 allows minority shareholders to seek company termination for just cause. If termination is not feasible due to economic or social factors, the court may expel minority shareholders and compensate them at actual value. Just causes include: Poor management. Systematic denial of shareholder rights. Misuse or waste of company assets (Prof. Dr. Reha Poroy et al., Ortaklıklar Hukuku Cilt II, 2017).   G. Conclusion The squeeze-out mechanism in Turkish law balances corporate efficiency and minority shareholder rights. TCC requires a 90% majority, just cause, and judicial approval, prioritizing fairness. CML allows expulsion with a 98% majority, streamlining governance. TCC Article 531 provides an alternative expulsion remedy in termination cases. Both frameworks ensure predictability and sustainability in corporate governance while protecting minority rights.  

I. INTRODUCTION Turkey's dynamic regulatory framework, anchored by the Electricity Market Law and its accompanying regulations such as Storage Regulation, License Regulation, and YEKDEM Regulation, unveils a compelling landscape for investors seeking to seize opportunities in the burgeoning electricity storage sector. By embracing a progressive approach, Turkey has established an advantageous environment for the establishment and operation of electricity storage facilities. In this article, we will delve into the essential provisions and notable advantages that await prospective investors who are keen on embarking on electricity storage projects in Turkey.   II. INCENTIVES FOR ELECTRICITY STORAGE PROJECTS Although "Green Field Projects" and "Brown Field Projects" are not legally defined terms in the applicable law, we will be using these terms for ease of reference and understanding. In the context of electricity storage, greenfield projects would involve the establishment of new facilities or technologies for storing electricity. In contrast to greenfield projects, brownfield projects involve investments in existing facilities, i.e. increase in the capacity or installation of new units. In the context of electricity storage, brownfield projects for storage would involve utilizing or retrofitting existing infrastructure for storing electricity. A. Green Field Projects Exempted from The Competition Process of YEKA: Under Article 7, sub-article 10, legal entities planning to establish an electricity storage facility can be granted a pre-license by EMRA for establishing a wind and/or solar energy-based power generation facility with a capacity equivalent to the storage facility. This is considered an incentive as new capacities were previously granted through competition process of YEKA. Simplified Pre-License Applications: It is provided that the fourth paragraph of Article 7 of the Electricity Market Law (e the criteria applicable to wind and solar energy-based power generation facilities) on the evaluation of pre-license applications for the establishment of electricity generation facilities shall not apply to the generation facilities that fall within the scope of these projects. YEK Support Mechanism: These projects may also benefit from the YEK Support Mechanism (YEK Support Mechanism will be explained in depth below.). Domestic Contribution Support: These projects may also benefit from Article 6-B of the YEK Law with the amendment dated April 4, 2023. Therefore, domestic contribution support for equipment to be used in electricity storage investments has been regulated as another incentive. B. Brown Field Projects Capacity Increase for Existing Facilities: Sub-article 11 of Article 7 allows legal entities holding a wind and/or solar energy generation license to increase their capacity up to the installed capacity of the electricity storage facility they plan to establish. The capacity increase must not exceed the licensed site boundaries, the existing capacity supplied to the system, and requires a positive connection opinion from TEIAS (Turkish Electricity Transmission Corporation) and/or the relevant distribution company. YEK Support Mechanism: Capacity increases under brownfield projects are exempted from the restriction in Article 6/C of the YEK Law, which normally prevents capacity increases from benefiting from the YEK Support Mechanism. In other words, capacity increases through storage activities can qualify for the support mechanism for the electricity supplied to the system (YEK Support Mechanism will be explained in depth below). Licensing Exemption: Article 4 of the Electricity Market Law states that certain activities require a license, while Article 14 allows electricity storage activities to be carried out without a license, subject to limits and procedures determined by the Energy Market Regulatory Authority (EMRA). Furthermore, pursuant to License Regulation, a legal entity engaging in market activities must obtain separate licenses for each activity and each facility where the activities will take place, except for certain exceptions. In this regard, the electricity storage unit within a generation facility, integrated storage units, and auxiliary resource units used in multi-source generation facilities are considered part of the main resource-based facility and can be evaluated under a single license. C. Incentives That Are Applicable To Both Greenfield And Brownfield Projects YEK Support Mechanism: Electricity storage projects (both greenfield projects and brownfield projects) in Turkey can benefit from the YEK Support Mechanism, governed by the Law on the Use of Renewable Energy Resources for Electricity Generation (YEK Law). Overall Benefits of the YEK Support Mechanism: Diversity of Supported Energy Sources Reducing Environmental Damages from Fossil Fuels Reducing Energy External Dependency Advantages of the YEK Support Mechanism for the Projects: Long Term Support Mechanism: Generation facilities that fall within the scope of YEKDEM are provided with an electricity purchase guarantee at a fixed price for 10 years. This creates a stable investment environment for renewable energy projects and offers investors long-term income security. This can facilitate the financing of renewable energy projects. Payment System Based on Production Forecasts: Generation facilities within the scope of YEKDEM forecast the amount of electricity they generate for the following day in advance. According to these forecasts, the facilities are compensated for their production at a fixed price with a purchase guarantee. The use of this system helps in the planning of electricity generation and the efficient functioning of the energy market. Fixed Prices and Durations: Commissioning: The date of commissioning is when a generation facility is officially put into operation, either partially or completely. Timeframe for YEKDEM Benefits: If a generation facility is fully operational, it can benefit from YEKDEM starting from the date of commissioning. If a generation facility joins YEK Support Mechanism before it is fully operational, it can benefit from YEK Support Mechanism for ten years from the date it first joins the program. For facilities that became operational between January 1, 2021, and June 30, 2021, they can benefit from YEKDEM until December 31, 2030, as per a Presidential Decree issued on September 17, 2020. Capacity Increases: If a legal entity requests to increase the installed power capacity of their generation facility and it is approved by the relevant authority, the benefits provided by YEK Support Mechanism for the increased capacity may vary: Capacity increases made within the scope of the eleventh paragraph of Article 7 of the Law (unspecified in the provided text) will benefit from YEK Support Mechanism for the remaining term of the facility's original YEK Support Mechanism benefits. However, legal entities whose installed power increase requests are approved by the authority as of February 28, 2019, and whose license amendments are made within this scope cannot benefit from YEK Support Mechanism for the increased capacity. Licensing Exemption: Pursuant to Article 7/1/e of License Regulation, “Market activities carried out within the scope of electricity storage and demand response within the framework of the limits, procedures and principles to be determined by the Board in consultation with the Ministry” is exempted from the license requirement.   III. REQUIREMENTS AND REGULATIONS 1. Integration into Existing Generation Facilities (Brown Field Projects): Companies holding licenses for power generation or participating in the YEK Support Mechanism can install storage units within their licensed generation facilities, as per Article 5 of the Storage Regulation. The capacity of the storage unit must not exceed the specified capacity in the facility's license, and it must be installed at the same measurement point as the facility for YEKDEM beneficiaries. 2. Connection and Utilization: The connection and utilization of integrated storage units, storage units within storage facilities, and stand-alone storage facilities are governed by the provisions outlined in the Electricity Market License Regulation. Unlicensed electricity generation facilities that have received a call letter can establish electricity storage facilities and engage in monthly offsetting for surplus energy, complying with the conditions specified in the Regulation on Unlicensed Electricity Generation. 3. Compliance with Regulations: Activities carried out through electricity storage units or facilities must comply with the regulations specified in the Storage Regulation. This includes integrating storage units into generation or consumption facilities, establishing detached storage facilities, and grid operators establishing their own storage facilities.   IV. CONCLUSION In conclusion, Turkey has established a progressive regulatory framework and support mechanisms for electricity storage projects, both in greenfield and brownfield contexts. The incentives provided by the government aim to encourage investments in the electricity storage sector and contribute to the country's renewable energy goals. Greenfield projects benefit from exemptions in the competition process and simplified pre-license applications, while brownfield projects can increase their capacity within the boundaries of existing facilities. Both types of projects can take advantage of the YEK Support Mechanism, which offers long-term income security through fixed-price electricity purchase guarantees. Additionally, licensing exemptions and regulations ensure the seamless integration, connection, and compliance of storage units and facilities. With these favorable regulations and support mechanisms, Turkey presents attractive opportunities for investors looking to participate in the growing electricity storage market.

Foreign court judgments are not directly enforceable in Turkey. According to Art. 50 of Private International Law and Procedure Act numbered 5718 (the “Act”), a final judgment rendered by a foreign civil court can only be enforced in Turkey if a competent Turkish court decides that it is enforceable. Therefore, those holding a foreign court judgment to be enforced in Turkey need to go through a court proceeding to make that court judgment enforceable. As a result of this procedure, if successful, a competent Turkish court will render an enforcement judgment (“exequatur”) with the result of giving enforceability to the foreign court judgment. This article summarizes the conditions for enforcement of a foreign judgment under Turkish Law.   Finality of Judgement The Act requires the judgment, enforcement of which is sought in Turkey to be final. A foreign court judgment that has not yet been finalized cannot be enforced in Turkey. The issue of whether the judgment has been finalized is determined as per the laws of the country where the judgment was rendered. It is important to note that whether the laws of the country where the judgment was rendered allow court judgments to be executed without being finalized does not make any difference here. Connected with this requirement, according to the Art. 53 of the Act, an official document or certificate confirming the final nature of the judgment enforcement of which is sought must be submitted with the petition initializing the enforcement proceeding.   Reciprocity According to the Art. 54(1) of the Act, there should be either an agreement, on a reciprocal basis between the Republic of Turkey and the state where the court decision is given (“contractual reciprocity”) or a de facto practice (“de facto reciprocity”) or a provision of law enabling the authorization of the execution of final decisions given by a Turkish court in that state (“legal reciprocity” or “de jure reciprocity)”. The reciprocity condition, one of the enforcement conditions specified in Article 50 and Article 54 of Law No. 5718 on International Private and Civil Procedural Law (“the IPCPL”), plays a vital role in practice, which must be examined ex officio by the court in the enforcement proceedings. Pursuant to Article 54/a of the IPCPL, enforcement of a foreign court judgment is dependent on “an agreement on reciprocity between the Republic of Turkey and the state where the judgment was issued or the existence of de jure or a de facto practice that enables enforcement of the judgments given by Turkish courts in that state”. In evaluation of the reciprocity, the first aspect to be considered should be whether there is a treaty or international agreement under which enforcement of foreign judgments is accepted. If Turkey and the state where the judgment in question was granted, are parties to such a treaty or international agreement, this would prove the existence of contractual reciprocity between those two countries. If such a treaty or agreement does not exist, enforcement would still be possible in case of the existence of de jure or de facto reciprocity. In order for the de jure reciprocity to exist, the enforcement conditions in the law of the country where the judgment was granted and the enforcement conditions regulated in Article 50 of the IPCPL and the following, should be at least equivalent. There will be no de jure reciprocity between Turkey and the states that have legislation that includes provisions that provide for stricter conditions for the enforcement of Turkish Judgments compared to the enforcement conditions for foreign judgments in the IPCPL. In evaluating whether there is de jure reciprocity or not, it would be more appropriate to make a general evaluation rather than requiring the existence of the same enforcement conditions in the laws of both countries. We would like to mention on the prohibition of examination of merits (revision) at this stage. Contrary to Turkish law, if foreign law adopts the revision system, it is very difficult for de jure reciprocity to exist. Because under Turkish enforcement law, it is forbidden to examine the merits of the case, other than for the purposes of evaluation of whether the conditions in Articles 50 and 54 of the IPCPL are fulfilled. Reopening the merits of the foreign judgments and review of the accuracy of the same are not allowed under Turkish Law . In summary, an important issue in considering whether there is de jure reciprocity is the existence of provisions that allow the enforcement of foreign court judgments in the laws of the state where the enforcement of the judgment is sought. In this vein, equivalence between enforcement conditions is essential. Differences between the legislation of respective states that do not significantly complicate the enforcement of foreign court judgments do not constitute an impediment regarding de jure reciprocity. Even if contractual or de jure reciprocity exists, if the judgments of Turkish courts are not enforced de facto by the state where the judgment is granted, the reciprocity is not considered to exist. This would be called a negative de facto practice, and the Turkish Court of Cassation held in its judgments that there is no reciprocity in such cases. On the other hand, to be able to hold that negative de facto practice exists, it should be proved that the courts of the state where the enforcement of the judgment was sought, must have rejected the enforcement of the Turkish court judgment; despite meeting all the conditions of enforcement under the laws of such jurisdiction. If the rejection of the enforcement of the Turkish court judgment is based on valid reasons according to the law of the foreign state, it cannot be concluded that there is no reciprocity on the grounds of negative actual practice. The de facto practice is always important in determining reciprocity. However, it should be kept in mind that the positive de facto practice is always easier to prove. In order for positive de facto reciprocity to exist, a similar Turkish court judgment must be enforceable in the state where the foreign judgment is issued. Despite an agreement or legal arrangement that establishes reciprocity, the fact that any judgment of Turkish courts has not been enforced yet in practice, because of a lack of request regarding this issue in the relevant state, may not be considered a mere reason for denial of an enforcement lawsuit. At this point, the issue of which date should be taken as a basis has particular importance in order to decide whether there is de facto reciprocity. This issue is controversial in Turkish literature. According to one opinion, the date of the enforcement judgment should be taken as a basis, while another opinion suggests that the filing date of the lawsuit should be. Another important issue in considering de facto reciprocity relates to the scope of de facto reciprocity. In other words, the question is as to whether there should be a different evaluation based on the subject matter of the lawsuit resulting in the judgment.  For example, assuming that de facto reciprocity exists in family law judgments, will this reciprocity also be applicable to foreign judgments relating to a commercial matter?  There is no consensus in the literature on this issue. An opinion suggests that de facto reciprocity should exist for judgments on the same subject, while another opinion defends that enforcement of any judgment granted by the court in such foreign jurisdiction (regardless of what its subject matter is) should be sufficient to establish reciprocity, as the philosophy underlying the condition of reciprocity requires. For the purposes of evaluating reciprocity (de jure and de facto), it does not matter whether Turkey recognizes such a specific state whose courts granted the judgment; in contrast to the evaluation of political reciprocity, where the parties to a specific treaty must recognize each other. If there is no contractual, de jure , or de facto reciprocity between Turkey and the relevant foreign state, the request for enforcement will be rejected. The question as to whether there is reciprocity between two states is one of the hardest issues in practice because there is no "central information source" to determine reciprocity. On the other hand, the judge has to examine ex officio and clarify whether the reciprocity exists. It is a very common practice for the Courts to consult with the official authorities about reciprocity matters. However, this method does not always work efficiently in practice and may even lead to inaccurate results. In addition to that, the existence of reciprocity can change over time and the Court of Cassation rules that in each case new research is required to be conducted. To sum up, it is necessary to examine in detail whether the reciprocity condition is met for the enforcement of foreign court judgments in Turkey. We believe that this examination should not be limited to the legislation and practices in Turkey in order to reach an accurate conclusion.   Exclusive Jurisdiction of Turkish Courts A further condition (negative) for the enforcement of a foreign court judgment in Turkey is that the judgment being sought to be enforced must not be on matters falling within the exclusive jurisdiction of Turkish courts. According to the High Court of Appeal, exclusive jurisdiction rules are for ensuring that the actions regarding issues regulated with these jurisdiction rules are only tried by Turkish courts (YHGK 04.03.2015, E. 2013/18-1628, K.2015/984). The underlying principle here is preservation of Turkish public order. In this vein, actions regarding real properties in Turkey, bankruptcy proceedings, labour disputes are considered within Turkish courts’ exclusive jurisdiction. It must be noted, however, these are not exhaustive. The Act does not explicitly state which actions fall within exclusive jurisdiction of Turkish courts. Therefore, the competent court will need to consider the underlying principle of jurisdiction rules and to determine whether the foreign court judgment is on a matter within the exclusive jurisdiction of Turkish Courts. Excessive Jurisdiction of the Foreign Court Another possible issue that may stand in the way of enforcing foreign court judgments is excessive jurisdiction—if the judgment has been rendered by a court that has deemed itself competent even if there is not a real relation between the court and the subject or the parties of the lawsuit However, in order for this to prevent enforcement decision, the counterparty must have raised its objection on this ground in the main proceedings.   Turkish Public Order A foreign court judgment cannot be enforced in Turkey if such a judgment explicitly contradicts the public order of the Republic of Turkey. In general, in order for this to constitute a legitimate ground for resisting enforcement of foreign court judgment, the judgment must be contrary to the fundamental rights and freedoms, fundamental principles of international law, due process of law or the right to be heard. However, as the concept of public order is a fluid one, it is not possible to set out exactly what would be contrary to it. This is mitigated by the fact that Art. 54(1)(c) of the Act stipulates explicit contrariness to public order. In other words, not every conflict with Turkish public order would suffice to prevent the enforcement of a foreign judgment. It needs to be an explicit one. With respect to the issue of public order, it was uncertain whether the fact that the foreign court judgment is without reasoning would contradict with public order of Turkey and different branches of the High Court of Appeals rendered inconsistent decisions regarding this issue. Afterward, it was settled by a decision of the High Court of Appeals’ General Assembly on the Unification of Judgement holding that mere absence of reasoning, per se, does not prevent enforcement of foreign court judgments (YİBGK 10.02.2012, E. 2010/1, K. 2012/1). Violation of Right to be Heard If the defendant’s right to be heard was violated, the defendant may resist the enforcement. If the defendant was not duly summoned pursuant to the laws of the state where the judgment was rendered or was not represented before that court, or the court decree was not pronounced in his/her absence or nonappearance in a manner contrary to the relevant laws of such foreign state, then the defendant may resist enforcement of that judgment in Turkey. However, the defendant must raise its objections in this matter before the court handling the enforcement proceedings. The courts are not allowed to consider these factors ex officio.   Satisfaction of the Judgement or Impediment for Enforcement Finally, the defendant may resist enforcement on the grounds that the judgment has been entirely or partially executed previously or an impediment has occurred preventing its execution. For instance, if the defendant against whom enforcement is to be sought no longer exists (e.g., has been wound up), then, in principle, it will not be possible to execute the foreign court judgment.   Competent Court The enforcement proceedings should be initiated before a civil court (in Turkish: asliye mahkemesi)". There are different branches of civil courts. In order to prevent delays, the competent court must be determined at the outset. In this vein, if the judgment enforcement which is sought relates to a commercial dealing between the parties, then commercial courts are competent to hear the case. After designating what branch of civil courts is competent, the geographic jurisdiction should also be determined. As a principle courts of the place where the defendant’s residence has jurisdiction to hear the enforcement lawsuit. If the defendant does not have a residence in Turkey, then the case needs to be brought where the defendant is based. In case none of these is applicable, then the case may be brought in Ankara, Istanbul, or Izmir. In conclusion, the enforcement of foreign court judgments in Turkey is a meticulous process that requires careful attention to a series of legal criteria. It is not a direct process and necessitates the verification of a foreign court judgment by a competent Turkish court through the mechanism of an exequatur. The key considerations include the finality of the judgment, its compatibility with the concept of reciprocity, the exclusive jurisdiction of Turkish courts, the absence of excessive jurisdiction from the foreign court, compliance with Turkish public order, and the respect for defendants' rights. Moreover, the judgment must not be previously enforced or face an impediment to its execution. The enforcement proceedings should ideally be initiated in a civil court where the defendant is based or has a residence. In the absence of such a place, the proceedings can be initiated in Ankara, Istanbul, or Izmir. Given the intricacies of this process, it is vital for holders of foreign court judgments to seek expert legal advice before initiating the enforcement proceedings in Turkey. The legal landscape in this area remains complex, with potential for evolving jurisprudence and legislative changes, which underscores the importance of obtaining specialized legal guidance.

I. INTRODUCTION Turkey's dynamic regulatory framework, anchored by the Electricity Market Law and its accompanying regulations such as Storage Regulation, License Regulation, and YEKDEM Regulation, unveils a compelling landscape for investors seeking to seize opportunities in the burgeoning electricity storage sector. By embracing a progressive approach, Turkey has established an advantageous environment for the establishment and operation of electricity storage facilities. In this article, we will delve into the essential provisions and notable advantages that await prospective investors who are keen on embarking on electricity storage projects in Turkey.   II. INCENTIVES FOR ELECTRICITY STORAGE PROJECTS Although "Green Field Projects" and "Brown Field Projects" are not legally defined terms in the applicable law, we will be using these terms for ease of reference and understanding. In the context of electricity storage, greenfield projects would involve the establishment of new facilities or technologies for storing electricity. In contrast to greenfield projects, brownfield projects involve investments in existing facilities, i.e. increase in the capacity or installation of new units. In the context of electricity storage, brownfield projects for storage would involve utilizing or retrofitting existing infrastructure for storing electricity. A. Green Field Projects Exempted from The Competition Process of YEKA: Under Article 7, sub-article 10, legal entities planning to establish an electricity storage facility can be granted a pre-license by EMRA for establishing a wind and/or solar energy-based power generation facility with a capacity equivalent to the storage facility. This is considered an incentive as new capacities were previously granted through competition process of YEKA. Simplified Pre-License Applications: It is provided that the fourth paragraph of Article 7 of the Electricity Market Law (e the criteria applicable to wind and solar energy-based power generation facilities) on the evaluation of pre-license applications for the establishment of electricity generation facilities shall not apply to the generation facilities that fall within the scope of these projects. YEK Support Mechanism: These projects may also benefit from the YEK Support Mechanism (YEK Support Mechanism will be explained in depth below.). Domestic Contribution Support: These projects may also benefit from Article 6-B of the YEK Law with the amendment dated April 4, 2023. Therefore, domestic contribution support for equipment to be used in electricity storage investments has been regulated as another incentive. B. Brown Field Projects Capacity Increase for Existing Facilities: Sub-article 11 of Article 7 allows legal entities holding a wind and/or solar energy generation license to increase their capacity up to the installed capacity of the electricity storage facility they plan to establish. The capacity increase must not exceed the licensed site boundaries, the existing capacity supplied to the system, and requires a positive connection opinion from TEIAS (Turkish Electricity Transmission Corporation) and/or the relevant distribution company. YEK Support Mechanism: Capacity increases under brownfield projects are exempted from the restriction in Article 6/C of the YEK Law, which normally prevents capacity increases from benefiting from the YEK Support Mechanism. In other words, capacity increases through storage activities can qualify for the support mechanism for the electricity supplied to the system (YEK Support Mechanism will be explained in depth below). Licensing Exemption: Article 4 of the Electricity Market Law states that certain activities require a license, while Article 14 allows electricity storage activities to be carried out without a license, subject to limits and procedures determined by the Energy Market Regulatory Authority (EMRA). Furthermore, pursuant to License Regulation, a legal entity engaging in market activities must obtain separate licenses for each activity and each facility where the activities will take place, except for certain exceptions. In this regard, the electricity storage unit within a generation facility, integrated storage units, and auxiliary resource units used in multi-source generation facilities are considered part of the main resource-based facility and can be evaluated under a single license. C. Incentives That Are Applicable To Both Greenfield And Brownfield Projects YEK Support Mechanism: Electricity storage projects (both greenfield projects and brownfield projects) in Turkey can benefit from the YEK Support Mechanism, governed by the Law on the Use of Renewable Energy Resources for Electricity Generation (YEK Law). Overall Benefits of the YEK Support Mechanism: Diversity of Supported Energy Sources Reducing Environmental Damages from Fossil Fuels Reducing Energy External Dependency Advantages of the YEK Support Mechanism for the Projects: Long Term Support Mechanism: Generation facilities that fall within the scope of YEKDEM are provided with an electricity purchase guarantee at a fixed price for 10 years. This creates a stable investment environment for renewable energy projects and offers investors long-term income security. This can facilitate the financing of renewable energy projects. Payment System Based on Production Forecasts: Generation facilities within the scope of YEKDEM forecast the amount of electricity they generate for the following day in advance. According to these forecasts, the facilities are compensated for their production at a fixed price with a purchase guarantee. The use of this system helps in the planning of electricity generation and the efficient functioning of the energy market. Fixed Prices and Durations: Commissioning: The date of commissioning is when a generation facility is officially put into operation, either partially or completely. Timeframe for YEKDEM Benefits: If a generation facility is fully operational, it can benefit from YEKDEM starting from the date of commissioning. If a generation facility joins YEK Support Mechanism before it is fully operational, it can benefit from YEK Support Mechanism for ten years from the date it first joins the program. For facilities that became operational between January 1, 2021, and June 30, 2021, they can benefit from YEKDEM until December 31, 2030, as per a Presidential Decree issued on September 17, 2020.   Capacity Increases: If a legal entity requests to increase the installed power capacity of their generation facility and it is approved by the relevant authority, the benefits provided by YEK Support Mechanism for the increased capacity may vary: Capacity increases made within the scope of the eleventh paragraph of Article 7 of the Law (unspecified in the provided text) will benefit from YEK Support Mechanism for the remaining term of the facility's original YEK Support Mechanism benefits. However, legal entities whose installed power increase requests are approved by the authority as of February 28, 2019, and whose license amendments are made within this scope cannot benefit from YEK Support Mechanism for the increased capacity. Licensing Exemption: Pursuant to Article 7/1/e of License Regulation, “Market activities carried out within the scope of electricity storage and demand response within the framework of the limits, procedures and principles to be determined by the Board in consultation with the Ministry” is exempted from the license requirement.   III.REQUIREMENTS AND REGULATIONS Integration into Existing Generation Facilities (Brown Field Projects): Companies holding licenses for power generation or participating in the YEK Support Mechanism can install storage units within their licensed generation facilities, as per Article 5 of the Storage Regulation. The capacity of the storage unit must not exceed the specified capacity in the facility's license, and it must be installed at the same measurement point as the facility for YEKDEM beneficiaries. Connection and Utilization: The connection and utilization of integrated storage units, storage units within storage facilities, and stand-alone storage facilities are governed by the provisions outlined in the Electricity Market License Regulation. Unlicensed electricity generation facilities that have received a call letter can establish electricity storage facilities and engage in monthly offsetting for surplus energy, complying with the conditions specified in the Regulation on Unlicensed Electricity Generation. Compliance with Regulations: Activities carried out through electricity storage units or facilities must comply with the regulations specified in the Storage Regulation. This includes integrating storage units into generation or consumption facilities, establishing detached storage facilities, and grid operators establishing their own storage facilities.   IV. CONCLUSION In conclusion, Turkey has established a progressive regulatory framework and support mechanisms for electricity storage projects, both in greenfield and brownfield contexts. The incentives provided by the government aim to encourage investments in the electricity storage sector and contribute to the country's renewable energy goals. Greenfield projects benefit from exemptions in the competition process and simplified pre-license applications, while brownfield projects can increase their capacity within the boundaries of existing facilities. Both types of projects can take advantage of the YEK Support Mechanism, which offers long-term income security through fixed-price electricity purchase guarantees. Additionally, licensing exemptions and regulations ensure the seamless integration, connection, and compliance of storage units and facilities. With these favorable regulations and support mechanisms, Turkey presents attractive opportunities for investors looking to participate in the growing electricity storage market.    

1. Introduction Turkey's urbanization, which gained momentum in the late 20th century and continues today, has raised concerns regarding unstructured urban planning, construction in unsuitable regions, and technically deficient buildings. These challenges, exacerbated by Turkey's location in an earthquake-prone zone, have resulted in severe tragedies during catastrophic earthquakes and floods. The devastating earthquake of 2023 brought these issues to the fore, causing numerous fatalities, immense material damage, and large-scale migrations from affected cities. This unfortunate event emphasized the pressing need for livable spaces in Turkey that meet modern environmental requirements and urbanization models. As a result, urban transformation measures have been implemented with the goal of swiftly and effectively transitioning living areas in the country towards safety and structured planning. Urban transformation in Turkey is mainly divided into three models: (i) direct transformation of identified risky buildings, (ii) comprehensive transformation of risky areas, and (iii) creation of reserved building areas for future construction. The term "risky area" denotes regions that require total transformation, while "reserved building area" refers to the development of new urban spaces that meet modern living requirements. Urban transformation projects in risky areas are conducted under the auspices of Law No. 6306 on the Transformation of Areas Under Disaster Risk ("Urban Transformation Law") and the Implementing Regulation of Law No. 6306 ("Regulation"). These legal instruments were designed to involve owners of risky properties in the transformation process, allowing them to decide the timeline, model, and specifications of the projects managed by contractors. However, disputes between property owners and contractors stalled progress, leading to an amendment in the Urban Transformation Law in 2019. With the amendment, the Republic of Turkey's Ministry of Environment, Urbanization, and Climate Change (“Ministry”) has been empowered to ex officio undertake and perform urban transformation projects, along with the authority to assign independent contractors for actual construction projects. The government's ex officio authority was already in place before the amendment, provided through the expropriation/urgent expropriation authorities of the government. However, the use of this right created further disputes and prolonged the transformation processes. The amendment rectifies this by granting the government direct authority to intervene in the transformation process. The Ministry's ex officio authority now extends beyond transformation projects or properties in risky areas, reserved building areas, or projects on independent risky buildings. A new definition in the Urban Transformation Law broadens the Ministry's authority, allowing it to exercise its ex officio right in areas where buildings are at risk of demolition, where buildings have collapsed or are severely damaged, or where there is a risk of severe damage due to ground shifts, landslides, floods, rock falls, fires, explosions, etc.   2. Urban Transformation Process in Areas Designated As Risky The process of urban transformation in risky areas generally comprises the following stages: The term "risky area" is defined by the Urban Transformation Law as an area declared by the President of the Republic of Turkey ("President") that: (i) poses a risk of life and property loss due to its ground conditions or the nature of its settlement or construction, (ii) experiences disruptions to public order or safety that interrupt or disturb everyday life, (iii) suffers from inadequate planning or infrastructure services, (iv) contains buildings that violate zoning legislation or are structurally or infrastructurally impaired, or (v) has at least 65% of its total buildings in violation of zoning legislation or constructed without a building license (even if licenses may have been obtained after construction completion).   2.1 Identification of the Risky Area The power to designate an area as a "risky area" lies solely with the President. However, the Ministry is responsible for identifying and examining potential areas, compiling a report on the identified area, and presenting this report to the President for approval. Furthermore, property owners of buildings within a potential area also have the right to petition the Ministry to designate their area as a "risky area." According to announcements made by a Minister in April 2023, more than 3.3 million residences have undergone a transformation as of that date, with the transformation process for an additional 250,000 residences still in progress.   2.2 Property Owners' Decision: The 2/3 Rule Although urban transformation legislation allows public authority to directly engage in urban transformation processes and execute these projects independently or via contracted contractors, the primary rule outlined in the legislation advocates for project execution based on the mutual agreement of property owners. Both Article 6 of the Urban Transformation Law and the corresponding Regulations stipulate that a minimum of a 2/3 majority of shareholders of parcels or lots within risky areas must agree to reconstruct a new building on the parcels or lots. They must also decide to enter into a contract with the contractors using a flat-for-land method or a different type of construction agreement. Therefore, for independent contractors intending to conduct urban transformation projects in risky areas and even on risky buildings not located within these areas, it is crucial to negotiate with at least a 2/3 majority of shareholders to initiate construction projects. A policy aimed at the timely completion of transformation projects is in place, allowing the government to intervene when minority shareholders (representing at least 1/3 of the shares) do not participate in or oppose the transformation decisions made by others. The Urban Transformation Law regulates a unique system for the shares of the minority shareholder, prioritizing majority shareholders to acquire the shares of the minority shareholders. If the majority shareholders fail to acquire these shares, the Ministry will acquire them on behalf of the Treasury. The acquisition process under Article 6/1 of the Urban Transformation Law includes the following steps: The Ministry evaluates the fair market value of the minority shareholders' shares. The evaluated shares of the minority shareholders are auctioned off to shareholders who have entered into an agreement for the transformation project. The sale price cannot be less than the fair market value. For transformation projects taking place in risky areas, if the shares cannot be sold to the shareholders who entered into an agreement, the Ministry will purchase and hold the shares on behalf of the Treasury. The government's commitment to completing transformation projects promptly and avoiding a state of uncertainty in risky areas is evident through its willingness to intervene by acquiring the shares of minority shareholders if the majority shareholders cannot. By acquiring the minority shareholders' shares, the transformation projects can proceed more efficiently.   2.3 Agreement Between Property Owners and Contractors: Prerequisites For Contractors To Conduct Urban Transformation Projects In Risky Areas Once a minimum quorum of 2/3 of shareholders or property owners has been reached, transformation projects can be undertaken by independent contractors (or public enterprises). An agreement, typically titled "Promise of Sale of Immovable Property and Construction Agreement in Return of Flat" ("Agreement"), is entered into between the property owners and contractors for the transformation project. In this Agreement, the contractor pledges to complete the construction in line with the requirements of the Urban Transformation Law and the technical specifications mutually determined by the parties, in exchange for the transfer of ownership of specified parts of the building from the property owners to the contractor. The Agreement must also specify the rules of partition. Contractors undertaking urban transformation projects in risky areas must meet certain requirements outlined in the relevant legislation as part of the general intent of the Urban Transformation Law and related legislation. The practices that contractors may encounter under the Urban Transformation Law and Regulation during the initiation and continuation of construction projects are as follows:   2.3.1 Possession of a Contractor's License Article 5 of the Classification and Registration Building Contractors Regulation stipulates that the construction of all buildings requiring a construction permit in Turkey must be carried out by and under the responsibility of a contractor or a joint venture of contractors, who possess legal or real personality and must have a license number. As buildings in risky areas are subject to a construction permit, all contractors wishing to undertake an urban transformation project must possess or apply for a contractor's license that enables them to perform the work and conduct the construction activities for these types of projects. Article 8 of the Urban Transformation Law similarly mandates contractors to have a contractor's license by enumerating the requirements for obtaining one, which include: Financial Sufficiency Technical Sufficiency Minimum Work Experience Accordingly, contractors should apply for a contractor's license from the 15 different groups of licenses (A, B, B1, C, C1, D, D1, E, E1, F, F1, G, G1, H, Temporary Group) considering the specifics of the transformation project they are undertaking. The required license group depends on the size and square meters of the building planned to be constructed in the risky area.   2.3.2 Insurance and Warranty Obligations As part of the policy to complete the transformation efficiently and minimize the risk of infringing the rights of property owners, Article 8 of the Urban Transformation Law mandates that, besides the license obligation, contractors conducting transformation projects in risky areas must have one of the following insurance policies or warranties: A building completion insurance policy covering the risk of the contractor's failure to completevthe construction project. A warranty provided by the contractor to the Ministry, calculated based on the building construction area according to the existing zoning plan or the proposed zoning plan; 10% of the approximate cost of the building in areas with a construction area of up to 50 thousand square meters. For projects with a construction area over 50 thousand square meters; 10% of the approximate cost of the building for the first 50 thousand square meters of the construction area. 8% of the approximate cost of the building for the construction areas between 50 – 75 thousand square meters. 6% of the approximate cost of the building for the construction areas between 75 - 100 thousand square meters. 4% of the approximate cost of the building for the construction areas over 100 thousand square meters.   There are two options for contracting companies to carry out projects in risky areas: they can either provide the guarantee detailed above, or they can procure building completion insurance, the scope, conditions, and application principles of which are determined by the Ministry of Treasury and Finance. Contracting companies can commence construction by choosing one of these two options.   2.3.3 Contractor Sales Limitations The 10% Rule and Municipal Approval Requirement. Upon obtaining relevant insurance policies or providing warranties to the necessary authorities, contractors must evacuate buildings located in risky areas and initiate the transformation process by commencing construction. Typically, these contractors plan to pre-sell properties, which will eventually be theirs upon project completion, as a financial strategy to fund current and future projects.   Nonetheless, for projects in risky zones, contractors' rights to sell properties to third parties prior to project completion are restricted. As stipulated in Article 13 of the Urban Transformation Law, contractors may sell their properties based on the progress level of construction, and only with municipal permission. Therefore, contractors desiring to pre-sell must first apply to the municipality for approval. On receiving the contractor's application, the municipality must carry out the following actions upon receiving an application from the contractor to sell properties:   Gauge the construction progress and calculate the completion percentage, using credible and verifiable measures. Permit the contractor to sell properties up to but not exceeding 10% of the project's completion ratio. This limit helps protect the property owners' interests and ensure the completion of the project. Require full approval from all property owners for sales exceeding the 10% ratio. This ensures that all owners agree with the pace of construction and the plan to sell properties before the completion of the project.   Without unanimous approval from all property owners, contractors cannot sell properties beyond the 10% completion ratio. This rule helps ensure that all property owners have a say in the project and protects their rights and interests.   3. The Ministry's Ex Officio Authority to Complete Transformation Projects While it is crucial to consider property owners' perspectives in urban transformation policies, the completion of urban transformation, particularly in large cities, is critical for Turkey's societal welfare and national safety, considering the nation's geological structure and fault line map. Thus, despite property owners' evaluations being important, the Urban Transformation Law's Article 6/A amendment dated July 4, 2019, allows the Ministry to undertake urban transformation projects in areas posing a risk of building collapse or where buildings have been significantly damaged due to natural disasters. The Ministry can exercise this power on a wide array of areas defined in the Urban Transformation Law, not specifically restricted to risky buildings or areas.   The ways in which the Ministry's power is exercised are: The Ministry can perform the transformation projects by itself or through a contractor, without seeking the consent of the owners or related parties. The Ministry can facilitate all land registry and cadastral transactions, including sales, transfers, and liens. Additionally, all kinds of demolition and construction permits and procedures can be executed at the Ministry's request without needing property owners' consent. Any existing agreements on transformation projects within the execution area can be terminated without seeking the consent of the involved parties. The Ministry determines the quality and size of the housing and workplaces to be built in the areas. Entitlement studies take into account the existing property's value and the value of the new structure to be given to the property owner.   4. Case Study: Urban Transformation in The Fikirtepe District Fikirtepe, a neighborhood in Istanbul's Kadköy district, is currently hosting one of Turkey's most expansive urban transformation projects. The district's central location and an above-average number of unlicensed, derelict buildings spurred the need for urban transformation, initiated in 1999 after the devastating Marmara earthquake. However, despite several starts, projects in the area have never been fully completed due to disputes among property owners and contractors, and financial issues arising from prolonged dispute resolution processes. As a result, the Ministry has decided to use its ex officio authority to expedite the transformation processes, dividing the area into three separate lots. Lot 1, known as the "New Fikirtepe Project," covers areas where independent contractors have failed to complete transformation projects. The Ministry is now managing these transformations, though it currently only uses its ex officio authority in lot 1, with no restrictions on using it in the remaining lots.   5. Conclusion The catastrophic earthquake in 2023 that affected at least ten cities in Turkey and resulted in over 50,000 deaths has underscored the urgent need for urban transformation. As many of Turkey's major cities lie on active fault lines, urban transformation is of crucial importance, especially considering experts' predictions of an impending major earthquake in Istanbul. The Urban Transformation Law and its associated regulations provide a framework to ensure that these transformations are carried out in a way that protects the rights of property owners, provides for societal welfare, and upholds the principles of safe and sustainable urban development. Individual risky building transformations are often conducted through agreements between property owners and independent contractors. However, the role of the Ministry in managing transformations in risky and reserved areas has become increasingly significant. In situations where projects are delayed due to disputes or other complications, the Ministry's ex officio authority under Article 6/A of the Urban Transformation Law allows it to intervene and ensure the project's completion. A prime example of this authority's use is the New Fikirtepe Project in Istanbul's Kadköy district, where the Ministry is now managing transformations due to failures by independent contractors. Given the devastating earthquake in 2023 and the predicted future seismic events, it is foreseeable that the Ministry will become more proactive in exercising its authority. Urban transformation in Turkey is not only a matter of urban renewal and development but also a matter of national safety and resilience in the face of natural disasters. By striking a balance between the rights and interests of property owners and societal needs, the Turkish government aims to create a safer and more sustainable urban environment for its citizens. In conclusion, as Turkey continues to deal with the aftermath of the 2023 earthquake and prepares for future seismic events, the Urban Transformation Law and its regulations provide an essential framework for managing the necessary transformations. With a focus on ensuring the completion of transformation projects and protecting the rights of property owners, the government has demonstrated a strong commitment to ensuring the safety and welfare of its citizens.