Article 57 of the Electricity Market Licensing Regulation, which was issued by Energy Market Regulatory Authority (“EMRA”) and published in the Official Gazette dated 02/11/2013 and numbered 28809 (the “Regulation”) regulating the share transfer transactions with respect to the legal entities holding pre-licenses or licenses, was amended with the Regulation regarding Amendment to the Electricity Market Licensing Regulation issued by EMRA and published at the Official Gazette dated 15/12/2017 and numbered 30271.

1. Legal Entities Holding Pre-License

Pursuant to the first paragraph of Article 57 of the Regulation, “Until the procurement of the license, except for the reasons of succession and bankruptcy, acts and transactions which will result in a direct or indirect change in the shareholding structure of the legal entity holding a pre-license, a share transfer or a consequence of a share transfer in such legal entity are not permitted.” However, Article 57 of the Regulation sets forth a number of exceptions for such limitations on the share transfer. With the amendment made on 15/12/2017, the subparagraphs (i) and (j) are added to the said exceptions as stated below:

“i) Any direct or indirect changes in the shareholding structure of a legal entity holding a pre-license that is caused by share transfers between the real persons who directly or indirectly own shares in such legal entity holding pre-licenses and his/her spouse or 1st degree blood relative,”

As stated above, subparagraph (i) regulates that the share transfers between the real person shareholders of a legal entity holding a pre-license that has direct or indirect shareholding therein, and their spouses or 1st degree blood relatives are permitted within the pre-license period.

j) Any direct or indirect changes in the shareholding structure of a legal entity holding pre-license and whose management is seized by Saving Deposit Insurance Fund.”

Within the scope of subparagraph (j) stated above, any direct or indirect change in the shareholding structure of legal entities holding pre-licenses and whose management is seized by Saving Deposit Insurance Fund (“SDIF”) are regulated as an exception. The exception hereof, is set forth without reference to the basis of the seize of management of the pre-license holder company by SDIF (whether SDIF is authorized by the Banking Law or by the Decrees having the force of law published by the Council of Ministers within the scope of the State of Emergency).

2. Legal Entities Holding License

Share transfer limitations and the process of the consent to be given by EMRA are regulated under the second paragraph of Article 57 of the Regulation. Pursuant thereto:

“The direct or indirect acquisition by real persons or legal entities, of shares representing ten percent or more of the share capital of a legal entity holding license, of shares representing five percent or more of the share capital of the publicly traded companies and share transfers, which are independent from changes in share capital, resulting in the change of control of the shareholding structure of the legal entity or any other transaction resulting in the same and liens put on shares in legal entities holding licenses and carrying out activities subject to regulated tariff and account pledges thereof put on the said legal entities are subject to consent every time. Any and all direct changes in the shareholding structure of legal entities holding market operating license, notwithstanding the abovementioned changes, in capital share, are subject to consent. The consent is granted by the Board for legal entities holding licenses and carrying out activities subject to regulated tariff and by the relevant main service unit for others. In the event that the share transfer is not completed within six months following the granting of the consent, the consent shall become invalid. It is mandatory to request the amendment of the license within 3 (three) months following the completion of the share transfer. The provisions of this paragraph shall not apply to publicly traded legal entities provided that it is limited to the publicly traded shares and to legal entities whose shareholder is a publicly traded legal entity provided that the change in the shareholding structure is arising from the publicly traded shares of the said shareholder. Reserving the provision of the eighth paragraph, in the event that other changes which do not require consent within the scope of this paragraph occur, such changes shall be notified to the Authority and if such changes necessitate so, it is mandatory to request the amendment of the license within 6 (six) months following the date of change.”

As is known, any direct or indirect changes, at the rates stated in the article, in the shareholding structure of legal entities holding license and any and all transactions resulting in a change of control in the shareholding structure of legal entities holding license are subject to the consent of EMRA and a maximum period of six months is determined between the date of the consent and the date the relevant transaction is completed. In the event that the share transfer is not completed within the said six-month period, the consent shall become invalid. The amendment dated 15/12/2017 imposes the obligation of requesting the amendment of the license to the license holders, within three months following the completion of the share transfer. Briefly, pursuant to the Regulation, license holders shall seek the consent of EMRA prior to the changes in their shareholding structure at the relevant rates and request from EMRA, the amendment of their license once the changes are completed.

In addition, second paragraph of Article 57 imposes the obligation of notifying EMRA of the changes even if the situation does not require the consent of EMRA and requesting the amendment of the license from EMRA within six months following the change if the said change requires so. The issue whether the said changes are only the changes regarding share transfers or not is not clear, yet this provision is regulated under share transfers. Hence, it is understood that even if the consent of EMRA is not required, the amendment of the license shall be requested if the relevant share transfer requires an amendment to the license.

“Excluding the legal entities holding license and carrying out activities subject to regulated tariff, the Authority shall be informed within 1 (one) year following the change, of (i) indirect changes in the shareholding structure caused by the change in the shareholding structure of the legal entity operating abroad which is a shareholder of the legal entity holding license, and of (ii) any transaction causing or resulting in the change of control of the shareholding structure of the legal entity holding license via the said legal entity operating abroad and in the event that it is required, it is mandatory to request the amendment of the license within 6 (six) months following the notification.”

The following changes shall be notified to EMRA within one year following the date of change by the license holders (except legal entities holding license and carrying out activities subject to regulated tariff):

i) Any indirect changes in the shareholding structure caused by the changes in the shareholding structure of shareholder legal entities operating abroad; and

ii) Any transaction causing or resulting in the change of control of the shareholding structure of the legal entity holding license via its shareholder legal entity operating abroad.

In the event that the abovementioned changes necessitate the amendment of the license, it is required to request the amendment of the license within six months following the notification to EMRA.

3. Effective Date

Article 7 of the Regulation regarding Amendment to the Electricity Market Licensing Regulation published in the Official Gazette dated 15/12/2017 and numbered 30271 states that the provisions of this regulation shall be effective as of the date of issue which is December 15, 2017.