Transfer of Shares in the Electricity Market
Contents
- I. Licensed Electricity Generation Facilities
- A. Transfer of Shares During Pre-License Period
- B. Transfer of Shares for License Holders
- II. Transfer of Shares of a License-Exempt Electricity Generation Company
The Electricity Market Law numbered 6446 (the “Law”), Electricity Market License Regulation (the “License Regulation”) and Regulation on License-Exempt Electricity Generation in the Electricity Market (the “License-Exempt Regulation”) impose restrictive provisions on the share transfers of the legal entities holding either licenses, pre-licenses to establish a licensed electricity generation facility or the right to establish a license-exempt electricity generation facility.
In this context, with the last amendment made to the License Regulation on 17th of August 2024, some share transfers, which are already exceptionally allowed, are bound to be approved by the Energy Market Regulatory Board (the "Board") beforehand. With this amendment, a regulatory step of inspection has been set and the conditions for share transfers have been tightened.
In this article we will address the regulations on share transfers for licensed electricity generation facilities, followed by a discussion on the transfer procedures related to license-exempt electricity generation facilities.
I. Licensed Electricity Generation Facilities
A. Transfer of Shares During Pre-License Period
Article 6(3) of the Law stipulates that, with the exceptions mentioned below, (i) any direct or indirect change in the shareholding structure of a legal entity holding a pre-license, (ii) share transfer, or (iii) actions and transactions resulting in the transfer of shares will result in the cancellation of the pre-license by the Board.
However, this prohibition on share transfers does not apply to the transfers described below, and in some cases, these share transfers will be subject to the approval of the Board. The table below delineates which share transfers are subject to approval of the Board under Article 57 of the License Regulation and which are merely required to be reported to the Board. The corresponding paragraphs of the said article to which each regulation pertains are indicated alongside.
Specifically:
Share Transfers Subject to Board Approval | Share Transfers Not Subject to Board Approval |
c) Indirect changes in shareholding structure of a legal entity holding a pre-license resulting from the changes in the shareholding structures of shareholders established abroad in the shareholding. | a) Changes in the shareholding structure of the publicly traded shares of publicly traded legal entity or changes resulting from the public shares of such legal entities' public shareholders |
e) Changes that result in all indirect shareholders included in the pre-license of a legal entity holding a pre-license becoming direct shareholders without changing their shareholding ratios, as well as changes that result in all direct shareholders becoming indirect shareholders without changing their shareholding ratios. | b) Changes in the shareholding structure of legal entities granted a pre-license for facilities anticipated to be established under international agreements.
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g) Direct or indirect share changes within the shareholding structure of the pre-license holder that do not result in a change of control.
| ç) Direct or indirect changes in the shareholding structure of the pre-license holder resulting from the public offering of shares by the pre-license holder and its direct or indirect corporate shareholders. |
ğ) Direct or indirect changes in the shareholding structure of legal entities holding pre-license by capital increase and/or change of shareholders where more than half of its’ capital directly or indirectly belongs to public institutions and organizations, by, provided that no new shareholder is admitted. | d) Direct or indirect changes in the shareholding structure of the pre-license holder resulting from share changes among its existing shareholders due to the exercise of their preemptive rights. |
h) Direct or indirect changes in the shareholding structure of the pre-license holder resulting from the acquisition of their own shares by the pre-license holder and its direct or indirect corporate partners under the provisions of the Turkish Commercial Code numbered 6102. | f) Changes in the direct or indirect shareholding structure of the pre-license holder by the sale or transfer of the shares held by public, who is also subject to a privatization program. |
ı) Direct or indirect acquisitions of shares in the pre-license holding legal entity conducted through foreign resources by legal entities established abroad or by legal entities controlled by them, as well as by legal entities established under the Turkish Commercial Code numbered. 6102. | j) Direct or indirect changes in the shareholding structure of the legal entity holding the pre-license whose management is seized by the Savings Deposit Insurance Fund (TMSF). |
i) Direct or indirect shareholding structure changes in the shareholding structure of the legal entity holding the pre-license as a result of the share transfers made between real persons who have direct or indirect shares in the shareholding structure of the legal entity holding the pre-license and who have first-degree blood kinship between them and their spouses. | k) Changes in the direct and/or indirect shareholding structure of the pre-license holder legal entity in the pre-licenses granted for renewable energy resource areas (YEKA). |
In any case, the changes in shareholding structures must be notified to the Board via Energy Market Regulatory Authority (EPDK) Application System within six months from the date of its realization. | |
B. Transfer of Shares for License Holders
For license holder companies, the regime on share transfers depends on whether the relevant licensee's tariff is subject to regulation or not. According to Article 57/2 of the License Regulation, for the changes in the shareholding structure of the license holding entities whose tariffs are not subject to regulation, it is deemed sufficient to notify the Board regarding the changes through Energy Market Regulatory Authority (EPDK) Application System within six months from the date of execution.
Thus, the companies that are subject to tariff regulation in the electricity market, such as “Energy Exchange Istanbul (EPİAŞ)”, “The Electricity Generation Corporation (EÜAŞ)”, “Turkish Electricity Transmission Corporation (TEİAŞ)”, distribution license holders, and designated supply companies, must obtain approval from the Board for changes in their shareholding structures. However, supply companies and generation companies are not required to obtain the Board’s approval for share changes.
II. Transfer of Shares of a License-Exempt Electricity Generation Company
Share transfers for legal entities owning license-exempt electricity generation facilities are relatively less restricted compared to the regulations for the licensed generation facilities. According to Article 37(9) of the License-Exempt Regulation, the prohibition on share transfers applies only to wind or solar energy generation facilities under Article 5.1(c) of the License-Exempt Regulation.
Accordingly, within the scope of Article 5.1(c) of the License-Exempt Regulation, any kind of share transfer is prohibited from the date of application to establish a License-Exempt wind or solar energy-based energy generation facility to the relevant authority until the acceptance of the established generation facility. Some exceptions such as except for the transfer of shares due to inheritance are listed in Article 37/9 of the License-Exempt Regulation.
Otherwise, the relevant legal entity's connection agreement and call letter will be cancelled means that the right to establish a license-exempt generation facility will be annulled. For license-exempt production facilities other than wind or solar energy facilities under Article 5.1(c), there are no restrictions on share transfers under electricity regulations.
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