1) Why “ordinary” share transfers become a regulated event in the energy sector
In most industries, selling shares is primarily a corporate law exercise: you negotiate price and warranties, sign a share purchase agreement, and update the share ledger. In Turkey’s energy sector, that mindset can create immediate risk—because licensing, public interest considerations, and regulatory supervision sit on top of Turkish Commercial Code mechanics.
Two features make energy companies different:
- Licensing and market-entry policy: Electricity market activities are carried out under licenses, and the legal framework empowers the Energy Market Regulatory Authority (EMRA / EPDK) to supervise structural changes that can affect market stability and consumer protection.
- Pre-license sensitivity (project-stage assets): In electricity generation projects, the “pre-license” phase is treated as a protected period. The law explicitly ties unauthorized changes in shareholding structure (direct or indirect) to pre-license cancellation.
If you are structuring a partnership, planning an equity round, onboarding a strategic investor, or refinancing with a lender that requires security over shares and accounts, you need a roadmap that integrates corporate steps, regulatory triggers, and transaction timing.
2) Legal foundations every investor should understand (electricity focus)
2.1 Company form and registered shares
For electricity market participants that are private-law entities, the Electricity Market Law provides that they must be incorporated as a joint stock company or a limited liability company, and (for joint stock companies) shares other than publicly traded ones must be registered shares (not bearer shares).
Practical implication: Your constitutional documents and cap table design must be aligned from day one—especially if you expect foreign investors, project finance, or later M&A.
2.2 Board permission for certain structural changes (tariff-regulated entities)
The same Law provides that certain procedures of market entities are subject to Board permission, including (for tariff-regulated legal entities) shareholding changes at specified thresholds (and any transaction resulting in a change of control), as well as transactions causing a change of ownership or operating right over facilities.
Practical implication: If your asset is in a regulated-tariff category (e.g., distribution), the approval analysis becomes stricter and is often a closing condition in transactions.
2.3 The “hard stop” rule during the pre-license phase
The Electricity Market Law’s pre-license principles include a clear warning: until a generation license is obtained, a pre-license is canceled if (subject to exceptions designated by secondary regulation) the shareholding structure changes directly or indirectly, shares are transferred, or transactions that would result in share transfer are carried out.
Practical implication: Equity rounds, internal reorganizations, and even certain “option-style” arrangements can become cancellation risk if not structured and timed correctly.
3) Typical partnership structures used in energy projects (and why they are chosen)
Energy ventures in Turkey commonly use one of the following models (often in combination):
3.1 Single-project SPV (Project Company)
A special purpose vehicle holds the pre-license/license and the project assets. Investors sit above it as shareholders.
Why it’s used
- isolates project liabilities,
- aligns with project finance,
- simplifies regulatory monitoring of the licensed entity.
Core legal tools
- shareholders’ agreement with reserved matters,
- board composition and veto rights,
- transfer restrictions aligned with regulatory approvals.
3.2 HoldCo + OpCo (Two-tier structure)
A holding company owns the licensed operating company.
Why it’s used
- allows portfolio aggregation,
- makes financing/equity raising easier at HoldCo level,
- sometimes facilitates exits via HoldCo share sale instead of OpCo.
Hidden issue: Even if you transfer shares at HoldCo, EMRA may treat the change as an indirect shareholding change or a change of control, which can trigger approval/notification obligations depending on the license type and stage. The Electricity Market Licensing Regulation addresses indirect shareholding determination rules and aggregation logic.
3.3 Joint venture (strategic + financial investors)
A JV is common in renewables, storage, and hybrid projects where one party brings development capability and the other brings capital.
Key drafting points
- clear nomination rights for management,
- deadlock resolution,
- exit routes (put/call, drag/tag),
- an explicit “regulatory compliance” covenant on share transfers.
3.4 Public company participation
If the shareholder (direct or indirect) is publicly traded, some changes may be carved out in secondary legislation for pre-license entities (limited to publicly traded shares).
Practical implication: Public-company driven cap table changes can still require careful mapping to see which portion is exempt and which portion remains regulated.
4) Share transfer control points under the Electricity Market Licensing Regulation (Article 57)
Article 57 of the Electricity Market Licensing Regulation is the main “traffic control” mechanism for share transfers in the electricity sector. It creates different rules for:
- pre-license holders, and
- licensed entities, with separate treatment based on whether the activity is tariff-regulated, publicly traded, or market operating.
4.1 Pre-license stage: general prohibition + enumerated exceptions
Until a license is obtained, acts and transactions that would change the shareholding structure (directly or indirectly) or transfer shares are prohibited for a pre-license holder—except for specific exceptions listed in Article 57(1).
The Regulation then lists multiple exceptions (e.g., certain public offering scenarios, subscription right use, some privatization-related changes, changes not creating a change of control, foreign-resource based acquisitions in specific patterns, close family transfers, YEKA-related provisions, and others), and requires that changes within scope be notified via the EMRA Application System within a defined period.
Practical implication: Many founders assume they can “just reorganize within the group” or “bring a new investor at HoldCo.” In the pre-license phase, that can be exactly the type of indirect change that the framework targets—unless it fits a recognized exception and the correct procedure is followed.
4.2 Licensed entities: thresholds and “approval events”
For licensed legal entities engaging in an activity whose tariff is subject to regulation, Article 57(2) sets an approval regime for:
- acquisitions reaching 10% or more of share capital (and 5% or more for publicly traded companies),
- share transfers resulting in a change of control (even if the percentage thresholds are not crossed),
- and transactions that have the same result.
Crucially, the same paragraph also treats certain security arrangements as approval events for those licensed entities, including:
- pledge on shares,
- account pledge on accounts,
- suretyship.
Practical implication: Lenders often require share pledges and account pledges. In a tariff-regulated electricity license, you cannot treat these as “purely banking documents.” They may require Board approval and must be built into the financing timeline.
4.3 Market operating license: an additional threshold
For entities holding a market operating license, direct share changes representing 4% or more of the capital are subject to Board approval.
4.4 Closing deadlines and post-closing steps
Article 57(2) also includes timing mechanics:
- if the share transfer is not completed within a set period after approval, the approval can become void,
- and it is mandatory to request a license amendment within a defined period after completion of the share transfer.
In addition, a later amendment text indicates that if completion does not occur within a period determined by the Board (not less than six months), the approval becomes invalid and the transaction cannot proceed without renewed approval. (LEXPERA)
Practical implication: Transaction documents should include (i) regulatory long-stop dates aligned with the approval validity period, and (ii) a clear covenant allocating responsibility for the license amendment filings.
4.5 Approval criteria: the “fit and proper” concept
Approval is granted on the condition that the incoming shareholder meets the conditions required during the license application stage.
Practical implication: Due diligence is not only about the target company; EMRA’s evaluation can extend to incoming shareholders’ compliance profile and qualifications, especially where indirect control changes.
5) The 2024–2025 tightening trend: what changed in practice
Even if you understand the baseline rule set, recent practice shows a tightening approach—particularly for pre-license companies and foreign-funded acquisitions.
5.1 Increased scrutiny and Board-approval gating in the pre-license period
Market commentary on the August 2024 amendment indicates that certain share transfers that were already only exceptionally allowed became subject to prior Board approval, tightening the transfer conditions and adding an inspection step. (Türk Hukuk Blogu)
5.2 Board Decision No. 12993: capital increase obligation (foreign-resource based structures)
A Board decision dated 07/11/2024 (Decision No. 12993) introduced a significant requirement for certain pre-license share transfer approvals: it requires the pre-license holder’s paid-in capital to be increased (within six months of decision notification) by an amount calculated as 25% of the total investment amount (and it sets unit investment amounts by resource type for calculation), with additional documentation expectations and consequences if the obligation is not fulfilled. (LEXPERA)
The same decision ties non-fulfillment to invalidation of the approval and potential pre-license cancellation under the share-transfer framework. (LEXPERA)
Practical implication: If you are structuring a foreign investor entry, you must model not just purchase price, but also the potential paid-in capital injection obligation and its timing, and reflect this in valuation and closing mechanics.
6) A practical step-by-step transaction roadmap (what “good” looks like)
Below is the workflow that reduces regulatory friction and avoids post-closing surprises.
Step 1 — Regulatory mapping (before term sheet)
- Is the target a pre-license holder or a licensed entity?
- Is the license category tariff-regulated?
- Will the transaction trigger:
- a 10% / 5% threshold acquisition?
- a change of control?
- a pledge or account pledge?
- a surety?
- an indirect change via HoldCo?
Your SPA should not be signed until this map exists—because it defines the conditions precedent and timeline.
Step 2 — Corporate architecture check
Verify:
- company type and share form requirements (registered shares where applicable),
- articles of association consistency with licensing regulation expectations (especially for pre-license applicants),
- shareholder registry and cap table integrity,
- any privileged shares, voting arrangements, or options that might be treated as control devices.
Step 3 — Due diligence that matches EMRA’s lens
Beyond classic corporate/financial DD, energy DD should cover:
- license/pre-license scope, special provisions, and compliance history,
- connection agreements, site rights, permits,
- pending disputes and regulatory correspondence,
- related-party arrangements and service procurement chains (because obligations remain with the license holder even if services are outsourced in many licensing frameworks).
Step 4 — Draft the SPA to reflect regulatory reality
Your SPA should include:
- condition precedent for EMRA Board approval (where applicable),
- a long-stop date aligned with the approval validity timeline,
- specific cooperation duties for filing and document production,
- termination rights if approval is denied or becomes void due to timing,
- price adjustments for capital increase obligations (where relevant, especially in foreign-funded pre-license scenarios). (LEXPERA)
Step 5 — Filing and process management (EMRA Application System)
Article 57 requires applications to be made through the EMRA Application System with the required information and documents.
Practical note: In well-run transactions, the regulatory submission package is drafted before signing, so the parties can file immediately after signing and avoid timing overruns.
Step 6 — Closing + post-closing license amendments
Plan the post-closing path:
- update share ledger and corporate records,
- ensure required notifications are made within the applicable period,
- file license amendment requests within the required timeframe after completion (and do not underestimate the workload).
7) Common pitfalls that create disputes (and how to avoid them)
Pitfall A: “We changed the HoldCo, so the licensed entity didn’t change”
EMRA can evaluate indirect ownership and control changes, and the Licensing Regulation provides an indirect shareholding framework (including aggregation logic with spouses/children and controlled entities).
Avoidance: Treat HoldCo moves as potentially regulated and document control impact.
Pitfall B: Options, convertibles, or veto rights that function like control
Even if shares do not move immediately, some arrangements can be characterized as transactions that “result in a change of control” (or have the same effect), which the regulatory framework explicitly targets.
Avoidance: Align investment instruments with the approval/notification analysis and avoid “shadow control” during sensitive periods (especially pre-license).
Pitfall C: Financing security package signed without approval analysis
Share pledge and account pledge can be treated as Board-approval events for tariff-regulated licensed entities under Article 57(2).
Avoidance: Build approval conditions into financing docs and coordinate lender counsel early.
Pitfall D: Approval obtained, but closing misses the validity window
If the transaction is not completed within the required period, approval can become void and a new approval may be required.
Avoidance: Use an implementation calendar with hard deadlines, and add SPA obligations that penalize delay-causing conduct.
8) Natural gas and other energy markets: similar logic, different details
While electricity projects tend to be the headline area for pre-license sensitivity, similar regulatory logic appears in other energy markets.
For natural gas, the Natural Gas Market Licensing Regulation expressly references license amendments following Board approval regarding share transfers and mergers (as part of the licensing amendment framework).
Practical implication: In multi-energy groups (electricity + gas + storage), an equity event can have cross-licensing consequences. The safest approach is to run a “multi-license trigger review” before signing any equity documentation.
9) Investor-friendly checklist: what to prepare before engaging counsel
If you want your transaction to move quickly, collect these early:
- Current cap table (direct + indirect) and shareholder registry extracts
- Articles of association and all amendments
- Pre-license/license copies and special provisions
- Proof of share form (registered vs publicly traded)
- All shareholder agreements, voting agreements, options, pledges
- Financing agreements that might require consents or security changes
- Permit matrix (EIA, site rights, connection agreements, DSİ or mining-related rights if applicable)
- Corporate approvals calendar (board/GA decision planning)
- Draft transaction structure chart (before/after) showing control and indirect ownership
10) How legal counsel typically adds value in these transactions
In energy-sector share transfers, legal counsel’s value is rarely “paperwork.” The real value is:
- structuring the deal so it is approvable and timely closable,
- drafting the SPA so approval risk is properly allocated,
- preparing an EMRA-ready submission package,
- preventing accidental pre-license cancellation risk,
- integrating financing security requirements into the approval framework,
- and defending the economics of the deal when capital increase obligations apply in foreign-resource scenarios. (LEXPERA)
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