The Energy Market Regulatory Authority ("EMRA") has issued further changes to the Electricity Market Licensing Regulation published in the Official Gazette dated 2 November numbered 28809 (the "Licensing Regulation") which had already seen a number of amendments to tamper change of ownership restrictions during the preliminary licence period from their original more rigid form to cater to market needs.

The change of ownership restrictions in the Licensing Regulation had already seen substantial amendment on 24 February 2017 where several important exceptions were introduced for changes of ownership during the preliminary licence period.

The Regulation Amending the Electricity Market Licensing Regulation published in the Official Gazette dated 15 December 2017 and numbered 30271 (the "Amending Regulation") further expands the list of available exceptions to cater to market needs and introduces new procedural steps to be taken with respect to changes of ownership of licence holders.

New exceptions for share transfers during the preliminary licence period

Article 6/3 of the Electricity Market Law dated 30 March 2013 numbered 6446 (the "EML") restricts changes of ownership (whether direct or indirect) of preliminary licence holders to exceptions to be set out in the Licensing Regulation. Any non-compliance with this restriction could result in the cancellation of the relevant preliminary licence.

A list of exceptions was subsequently introduced by the EMRA in Article 57(1) of the Licensing Regulation and this list has since been in an almost constant state of evolution in response to market feedback.

The latest changes, introduced under the Amending Regulation provide two new exceptions as follows:

  • direct or indirect shareholding structure changes in a preliminary licence holder as a result of transfers between spouses and first degree relatives; and
  • direct or indirect shareholding structure changes in a preliminary licence holder which is under administration by the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu).

Accordingly, it is now going to be possible for first degree relatives and spouses to transfer shares in a preliminary licence holder between themselves.

Furthermore, change of ownership restrictions that apply during the preliminary licence period shall not be applicable to companies under administration by the Savings Deposit Insurance Fund (Tasarruf Mevduatı Sigorta Fonu).

New procedural rules for share transfers during the licence period

As a general rule, any change of ownership (whether direct or indirect) of 10%1 or more of the capital of licence holders and any change of control of licence holders is subject to the approval of EMRA according to Article 57(2) of the Licensing Regulation.

Pursuant to the Amending Regulation, licence holders will be required to apply for an amendment to their licences within three months following the completion of any change of ownership requiring EMRA approval.

Ownership changes which do not require EMRA approval will need to be notified (where, necessary, together with an application for a licence amendment) within six months.

The Amending Regulation introduces a further important procedural relaxation. According to new Article 57/8 of the Licensing Regulation, indirect changes of ownership in a licence holder as a result of changes in ownership in a foreign shareholder must be notified to EMRA within one year and, where necessary, an application for a licence amendment must be made within 6 months from such notification.

These indirect changes would previously have required specific prior approval from EMRA.

The change of ownership restrictions in the Licensing Regulation, originally brought to eliminate the practice commonly known as "licence trading" and better utilise limited renewable resources, has perhaps been the most amended piece of energy market legislation.

While market participants have already started to make use of the new exceptions, time will tell if further relaxations to the Licensing Regulation for share transfers are going to be necessary. In any event, market participants are relying on EMRA's market-responsive approach, as demonstrated by the Amending Regulation, to continue into the future.

Authors:

Aykut Bakırcı

Zekican Samlı

Ayşegül Sargın

Footnotes

1 5% in publicly traded entities.

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