• It is the spirit and not the form of law that keeps justice alive.
    Earl Warren


The Regulation Amending the Electricity Market Licensing Regulation was published in the Official Gazette dated 15 December 2017 (“Amendment Regulation”) and introduced important changes to the Electricity Market Licensing Regulation (“Regulation”), ranging from requirements concerning the generation license application process, data protection, and share transfers. A summary for some of the main provisions is as follows:


Application for a generation license: As part of the application for a generation license, the Regulation required the applicant to submit a bank letter of guarantee, the amount of which was going to be determined by the Electricity Market Regulatory Board. It was indicated in the Regulation that the security provided within the scope of the pre-license would be subtracted from the said amount. The Amendment Regulation, however, has eliminated this subtraction mechanism and only provides a maximum amount (same as before) for the bank letter of guarantee to be given by the applicant.


Obligation concerning data protection: The Regulation has added a new obligation for license holders. Accordingly, license holders must take all necessary technical and administrative measures so that sufficient security is provided to prevent illegal access and operation of data (at relevant data processing centers and regarding the license holder’s activities and transactions) and to ensure the confidentiality and integrity of and access to such data.   


Share transfers: The general rule is that there can be no direct or indirect share transfers in companies holding a pre-license. The Regulation had certain exceptions to this rule, which are further broadened with the Amendment Regulation. Under the Amendment Regulation, some of the additional cases when the share transfer restriction will not apply are as follows: (i) changes leading all indirect shareholders to become direct shareholders (with no change in shareholding ratios)  and changes leading all direct shareholders to become indirect shareholders (with no change in shareholding ratios); (ii) direct and indirect shareholding changes between current direct and indirect shareholders, provided that there is no change of control; (iii) direct and indirect shareholding changes due to the pre-license holder’s and its direct and indirect legal entity shareholders’ acquisition of their own shares within the scope of the Turkish Commercial Code (“TCC”); and (iv) direct and indirect share acquisitions of foreign entities or entities controlled by such foreign entities and incorporated in line with the TCC, by utilizing foreign sources. As such, the share transfer limitation in pre-license holding entities is now less stringent when it comes to indirect shareholding changes and also direct shareholding changes when foreign funds are used.


When share transfers, which are subject to a prior approval from the Electricity Market Regulatory Authority (“EMRA”), are concerned, the Amendment Regulation requires that the relevant license holder requests the amendment of its license within three months as of the date the share transfer is realized.  Other amendments not requiring an approval within the scope of the same provision should be notified to EMRA. If necessary, a license amendment should be requested within six months as of the amendment. Amendments concerning foreign entity shareholders are reserved.


The Amendment Regulation also puts forward a notification process with regards to changes in a license holder’s foreign entity shareholder. As such, except for license holders with regulated tariffs, indirect shareholding changes taking place as a result of shareholding changes in a foreign entity shareholder and  transactions leading to or causing a change of control in the license holder’s shareholding due to such foreign entity shareholder, must be notified to EMRA within one year, and if necessary, a license amendment request should be filed within six months following such notification.


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