A new transformerless four-leg topology is suggested for shunt compensation, the modular multilevel converters (MMC) based on the half-bridge converters, to achieve higher performance as a STATCOM in a distorted and unbalanced medium-voltage large-current (MV-LC) system. Further, an extended MMC (EMMC) is proposed in order to manage more accurate compensation for high-power applications. Both proposals can be controlled for various purposes such as reactive power and unbalance compensation, voltage regulation, and harmonic cancellation. Moreover, related control strategies are also suggested for both the MMC and the EMMC to ensure that the source-end three-phase currents are sinusoidal and balanced. Also, the dc-link capacitors of the half-bridge converters are regulated. One interesting application for the EMMC-based STATCOM could be the improvement in power quality and performance of the electrified railway traction power supply system. Both the MMC- and the EMMC-based STATCOM along with their proposed control strategies were simulated; further, to verify the suggestions, these proposals were also implemented on a 30-kVA modular laboratory prototype. Experiments and simulations confirm the predefined objectives.