EMRA Approval For Direct And Indirect Share Transfers In License-Holding Companies In The Natural Gas Market

The transfer of shares in a license-holding company operating in the natural gas market is not merely a corporate law transaction to be completed under the Turkish Commercial Code. Prior approval from the Energy Market Regulatory Authority may be required where, among other matters, direct or indirect share acquisitions cross above or below specified thresholds or privileges or usufruct rights are created.

1. Regulatory Framework

Under Natural Gas Market Law No. 4646 (the “Law”), natural gas market activities involving import, transmission, storage, wholesale, distribution, compressed natural gas and export are conducted under a license. Since a license is granted following an assessment of a particular legal entity’s financial capacity, shareholding structure and ability to satisfy the conditions governing the relevant activity, material changes in the license holder’s shareholding structure are subject to the oversight of the Energy Market Regulatory Authority (“EMRA” or the “Authority”).

The principal framework for this oversight is set out in Article 42 of the Natural Gas Market Licensing Regulation (the “Regulation”). The Regulation covers not only transfers of shares in the license holder itself, but also indirect acquisitions at higher levels of the ownership structure, certain voting and privilege rights, and share pledges.

2. Distinction Between Direct and Indirect Share Transfers

A direct share transfer is a change in ownership of the shares of the license-holding company itself. For example, the sale by an existing shareholder to a third party of a fifteen per cent interest in a natural gas distribution company constitutes a direct share transfer.

An indirect share transfer occurs at the level of a direct shareholder of the license holder or higher in the ownership chain. For example, if fifty-one per cent of the shares in a holding company that owns sixty per cent of the license holder are transferred, there is an indirect change in the ownership of the license holder even though its direct shareholding table remains unchanged. The indirect ownership percentage is calculated by multiplying the ownership percentages at each level of the chain; where the same person is reached through different ownership chains, the relevant indirect percentages are considered together.

Accordingly, examining only the license holder’s share ledger is insufficient. The pre- and post-transaction ownership charts, ultimate individual shareholders, voting rights, privileges and rights to appoint members of management bodies must be reviewed together.

3. Principal Circumstances Requiring EMRA Approval

Pursuant to Article 42 of the Regulation, each of the following transactions is subject to the approval of the Energy Market Regulatory Board (the “Board”):

• the direct or indirect acquisition by an individual or legal entity of shares representing ten per cent or more of the share capital of a license-holding company;
• the direct or indirect acquisition of shares representing five per cent or more of the share capital of a publicly held license-holding company;
• acquisitions resulting in a shareholder’s interest exceeding ten per cent of the share capital of the license-holding company;
• transfers resulting in a shareholder’s interest falling below ten per cent or, in a publicly held company, below the applicable five per cent threshold; and
• the acquisition of voting rights or the creation of a pledge over shares.

This regime takes account of threshold crossings for both the transferee and the transferor. For example, an existing shareholder increasing its interest from eight per cent to eleven per cent by acquiring an additional three per cent is subject to approval. Similarly, a shareholder reducing its interest from twelve per cent to nine per cent by transferring three per cent also requires approval. Dividing a transaction into multiple stages does not prevent connected transfers from being assessed together.

4. Broader Approval Regime for Storage License Holders

A stricter rule applies to companies holding natural gas storage licenses. Any change of ten per cent or more in the share capital structure of such companies—or five per cent or more in the case of publicly held companies—arising for any reason is subject to Board approval. This approval requirement applies irrespective of whether the change causes a shareholder to cross above or below the ten per cent threshold. Accordingly, for storage license holders, it is necessary to consider not only a particular person’s final shareholding percentage but also the aggregate scale of the change in the shareholding structure.

5. Privileges, Usufruct Rights and Transactions Other Than Share Transfers

Even where no share transfer takes place, the creation or cancellation of privileges over existing shares, the issuance of participation certificates, and the transfer of privileged shares within the direct shareholding structure of the license-holding company are subject to Board approval regardless of the ten per cent and five per cent thresholds.

However, a direct holder of privileged shares may transfer those shares to another existing holder of privileged shares without prior approval, provided that the transfer does not result in the transferor ceasing to be a shareholder. Likewise, transfers of privileged shares within the license holder’s direct or indirect legal-entity shareholders that do not fall within the principal threshold rules are not subject to prior approval. Such transactions must be notified to the Authority within sixty days of completion.

In addition, persons who directly or indirectly hold ten per cent or more of a license-holding company—or five per cent or more in the case of a publicly held company—or who, notwithstanding a lower ownership percentage, hold shares conferring the privilege to appoint members of the board of directors or supervisory board, as well as persons who acquire usufruct rights over such shares, must satisfy the conditions applicable to shareholders at the license application stage.

6. Interests Aggregated for Threshold Calculations

An amendment dated 24 December 2025 elaborated the aggregation rule applicable to family members and affiliated entities. Shares and other rights held by an individual shareholder of a license-holding company, that person’s spouse and minor children, and companies in which any of them serves on the board of directors or supervisory board or acts as a partner with unlimited liability are deemed to belong to a single person. Furthermore, excluding public legal entities, shares and other rights held in entities in which the relevant persons directly or indirectly own twenty-five per cent or more of the share capital are also considered together.

As a rule, share transfers between an existing individual shareholder of a license-holding company and that person’s spouse or minor children are not subject to approval. Board approval is nevertheless required if the spouse or minor child will become a shareholder of the license-holding company for the first time. Where a minor child identified in the license reaches the age of majority, the Authority must be notified and an application to amend the license must be submitted; such amendment is made free of charge.

7. Principal Exceptions and Notification Obligations

The Regulation excludes certain transactions from the prior approval regime, while generally requiring notification or a license amendment:

• share transfers in a distribution company to a municipality or a municipally owned company are not subject to prior approval; the change must be notified to the Authority and a license amendment must be requested;
• changes in shareholding resulting from a capital increase by a legal entity that indirectly holds shares in the license holder are not subject to prior approval; the change must be notified to the Authority;
• where the heirs become shareholders following the death of an individual holding more than ten per cent of the shares, prior approval is not required; notification must be made within thirty days after completion of the transfer;
• where shares in the license holder or its direct or indirect legal-entity shareholders are transferred to a legal entity such as a fund, foundation or association whose ownership structure is not ascertainable, Board approval is not required if the ownership percentage of no individual or legal entity falls below ten per cent;

a public offering or admission to trading on a stock exchange is likewise not subject to prior approval provided that it does not reduce the interest of any person within the license holder’s direct or indirect ownership structure below ten per cent. Board approval is required if an initial public offering or an increase in the public float will cause a shareholder’s interest to fall below ten per cent. For public offerings, the Regulation also sets forth requirements concerning registered shares, a maximum forty-nine per cent ratio, restrictions on participations and post-transaction filing obligations.

8. Application, Validity Period of Approval and License Amendment

For share transfers subject to Board approval, approval must be obtained before the transaction is completed. The transferee must satisfy the conditions applicable to shareholders at the license application stage. Depending on whether the transferee is an individual or a legal entity, the application must include trade registry documents, the share transfer agreement, financial qualification documents, declarations confirming the absence of disqualifying circumstances, and information and documents evidencing the direct and indirect ownership structure. The Authority may request additional information and documents during its review.

Under the amendment dated 24 December 2025, an approval remains valid for one year from the date on which it is granted. If the share transfer is not completed within this period, the approval lapses and the transaction may not proceed unless a new approval is obtained.

If the share transfer completed following approval requires an amendment to the license, an application for the license amendment must be submitted within three months of completion, together with documents evidencing that the share transfer has been completed. If the three-month period is exceeded, an additional license amendment fee applies for each month of delay, capped at six months. Delays exceeding six months are also subject to enforcement as a breach of the applicable legislation.

9. Transaction Documents and Closing Planning

The share transfer agreement should make EMRA approval a condition precedent to closing, thereby preventing completion of the change in ownership before approval is obtained. The agreement should clearly allocate the parties’ obligations to contribute to the application file and respond to the Authority’s requests for additional information, as well as address conditional approval, the one-year validity period of the approval and responsibility for the post-closing license amendment.

Competition Board clearance, change-of-control provisions in financing documents and trade registry formalities should also be considered within the same timetable. None of these processes replaces EMRA approval.

Conclusion

When assessing share transfers involving license-holding companies in the natural gas market, it is insufficient to consider only the percentage of shares being transferred. The direct and indirect ownership chain, crossings above or below the applicable thresholds, the type of license, voting and privilege rights, persons acting in concert or whose interests must be aggregated, and post-transaction license amendment obligations must all be examined together.

As a general rule, direct or indirect acquisitions of ten per cent or more—or five per cent or more in publicly held companies—are subject to Board approval. Transactions other than share transfers, such as share pledges, acquisitions of voting rights and privilege-related arrangements, may also require approval. In particular, the one-year validity period for approvals, the rules governing intra-family transfers and the consequences of delayed license amendments introduced by the amendments dated 24 December 2025 make it necessary to plan the transaction timetable at an early stage.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.