Turkish Government has attracted the foreign investors on renewable energy resources recently. The Turkish government encourages investors to implement energy projects in Turkey with new incentives on renewable energy. The government provides feed-in tariff incentives for the renewable energy investments. This ensures that the government's feed-in tariff will accelerate investment projects in the coming years. In this context, foreign investors should pay attention to the points pursuant to the charters of corporate which will be founded or taken over.

Article 7 of Electric Market Licensing Regulation sets forth "All legal entities subject to private law and applying for a license in order to operate in the market are required to have been established as joint stock or limited liability companies in accordance with the provisions of the Turkish Commercial Code no. 6762. If established as joint stock companies, all shares of the company, except the auto-producers must be registered shares. But, the joint stock companies, whose shares are not fully registered, may also be granted license on the conditions to modify their main charters following the Board decision addressing the grant of license is accepted."

Nevertheless, paragraph 4 of article 10 in Regulation states the key provisions that should be defined in charter:

"The legal entities are required to comply with the following liabilities within the scope of modification of main charters:

a. The legal entities established as joint stock companies in accordance with the provisions of the Turkish Commercial law no: 6762 must ensure that their shares are all registered,

b. The legal entity should have the following minimum capitals

1) For generation license applications: equal to twenty percent of the total investment amount envisaged for the generation facility, which is five percent for nuclear energy license applications,

2) For distribution license applications: equal to at least fifteen percent of the transfer or purchase price of the distribution region whose ownership or operating rights have been transferred,

3) For wholesale license applications: two million TL,

4) For retail license applications: one million TL,

5) For retail license applications only for engagement in retail services: two hundred thousand TL for each distribution region to be served.

c. In case the legal entities, applying for the first time for more than one license the minimum capital shall be equal to the sum of the capitals deemed appropriate for each of the license applications accepted.

d. The main charters other than address changes shall indicate that the prior approval of the Authority shall be required for modification of the main charters,

e. The provisions of this regulation regarding the transfer of shares shall be included in the main charters,

f. In case the engagement in the distribution activity is accepted; in case the cancellation of the distribution license is required for protection of consumers and prevention of service interruption, the main charters shall include the following provisions:

1) The members of the executive board of the licensee may be changed by replacing them partially or completely in line with the Board decision to be taken before the cancellation of the license,

2) If the facilities within the distribution area operated by the distribution licensee are owned by the related distribution licensee, the facilities owned by the distribution licensee shall be transferred at the price determined in the tender to be held on behalf of the related licensee by the Authority within one hundred and twenty days within the framework of the legislation.

6) In case a licensee files an application for a new license or to modify the license for upgrading the installed capacity more than 50 % the shareholders' equity is kept in regard instead of the minimum capital provisions indicated in item (b) of paragraph four, and the financial qualification of the licensee is determined on the basis of the amounts or ratios indicated in the referred item.

7) The minimum capital amounts indicated in sub-items (2), (3), (4) and (5) of item (b) of paragraph four may be increased by the Board annually on the condition not to exceed two folds of the Electricity Market Index.

8) The minimum capital amounts indicated in sub-items (2), (3), (4) and (5) of item (b) of paragraph four may be increased by the Board annually on the condition not to exceed two folds of the Electricity Market Index"

In the view of this information, charters or amendments in charters of the corporates related to power generation are subject to control and approval of Energy Market Regulatory Authority (hereafter EMRA). The corporates which can not obtain approval from EMRA, shall not be able to get license and carry on business in energy market. Should the key provisions are not found in charter, then the corporate will have to amend the charter and submit it to approval of EMRA after the registry procedures.

Major activity of the corporate should be stated based on the provisions of Electricity Market Law No 4628, relevant to control and subsidiary.

We would like to emphasize that the provisions related to share transfer in charter should be in accordance with the article 1 of Electricity Market Law No 4628, in the manner that they do not cause control.

Corporates for every energy projects and investments should be founded as well as their accounting should be recorded seperately pursuant to Electricity Market Law. This is a result of cross-subsidize prohibition.

On the other hand, provision which set forth mergers and acquisitions should be stated regarding the provisions of mergers and acquisitions set forth in Law on the Protection of Competition.

Not only the corporates that will be founded but also the mergers and acquisitions are subject to the control of EMRA.

In case breach of these obligations or it is clearly understood that these obligations are not fulfilled during the audit of EMRA, EMRA will apply sanctions which Electricity Market Law provides in article 11 and corporates will be faced with irreparable damages. These sanctions include administrative fines as well as cancellation of the license.

Control in energy market will be stricter after the new Turkish Commercial Code which shall enter into force on July 2012 and today's voluntary issues shall be compulsory. For instance , new Turkish Commercial Code provides that capitals of the energy corporates shall be determined in respect of MW size of the investment.

Considering dinamic nature of energy market and regular amendments of law in energy market, corporates that carry on business in energy market should constitute their law, financial and administrative units which follow the developments in energy market closely.

In practice, these are not taken into consideration in the stage of foundation and corporates face with financial and time loss in approval process of licensing.

International firms and investors which intend to invest in Turkey in cooperation with Turkish firms, should encourage the Turkish firms with respect to consult lawyers, investment or financial advisors as of foundation of the corporate in order to prevent any dispute . Cooperation of lawyers, investment or financial advisors has importance in troubleshooting fast and permanently. Consulting after dispute will be temporary resolution.

The amendments will be made as of 2012 in energy market. But after the amendments planned to make between 2013 and 2015 blocking will occur and energy market will be more transparent. In this process, mergers and acquisitions will occur and make energy market well coordinated.

Turkish and foreign corporates look and think forward will survive and be the major instruments in energy market.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.