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Requirements for Changes in Shareholding and Boards in Oil & Gas, Mining, Power and Geothermal Sectors - Regulatory Update

Requirements for Changes in Shareholding and Boards in Oil & Gas, Mining, Power and Geothermal Sectors - Regulatory Update

15 August 2017

Ministry of Energy and Mineral Resources ("MEMR") issued Regulation Number 48 of 2017 on Supervision of Operations of Business Activities in the Energy and Mineral Resources Sector ("Reg 48/2017") which came into effect on 3 August 2017. Reg 48/2017 was issued following feedback on Ministry of Energy and Mineral Resources Regulation No. 42/2017 ("Reg 42/2017"). Reg 42/2017 required prior approval from MEMR for most transfers of shares and changes to the board of directors and commissioners in the energy and mineral resources sector.  

 

Key Points in respect of Reg 48/2017 are as follows:

 

1. Oil & Gas

 Upstream:

  • prior approval from MEMR is required to assign a participating interest or transfer shares resulting in a direct change of control;
  • mandatory reporting to MEMR is required for transfer of shares causing an indirect change of control;
  • assignment of majority participating interest to non-affiliated parties in the first 3 years of the exploration period is prohibited; and
  • report to MEMR is required for changes to members of the Board of Directors and Board of Commissioners. [Reg 42/2017 required prior approval]

 Downstream:

  • mandatory reporting to MEMR is required for transfer of a majority of shares of the project company; and [Reg 42/2017 required prior approval]
  • mandatory reporting to MEMR is required for changes to members of the Board of Directors and Board of Commissioners. [Reg 42/2017 required prior approval]

 2. Mining

  • prior approval from MEMR required for transfer of shares in entities holding a Mining Business Permit ("IUP"), Special Production Operation IUP for Processing and/or Smelting ("Smelting IUP"), Special Mining Business Permit ("IUPK"), Contract of Work ("CoW"), or Coal Contracts of Work ("CCoW"); and
  • prior approval from MEMR is required for changes to members of the Board of Directors and Board of Commissioners.

 3. Power

  • transfer of shares prior to Commercial Operation Date ("COD") only allowed to an affiliate in which the sponsor holds at least 90% of the shares; [No change from 42/2017]
  • mandatory reporting to MEMR for transfer of shares prior to and after COD and prior approval from buyers of electricity under the PPA;
  • mandatory reporting to MEMR for changes to members of the Board of Directors and Board of Commissioners. [Reg 42/2017 required prior approval from MEMR and a recommendation from the buyers of electricity]

 4. Geothermal

  • report to MEMR is required for share transfer in privately held entities holding Geothermal license ("IPB"); and [Reg 42/2017 required prior approval]
  • (i) IPO's as well as (ii) changes in shareholding of registered shares require prior approval from MEMR; [Not regulated under Reg 42/2017.]
  • report to MEMR is required for changes to members of the Board of Directors and Board of Commissioners. [Reg 42/2017 required prior approval]

 

 

This publication contains general information and does not constitute legal advice. For questions or comments, please contact:

 

Randy Rifdaan (randy.rifdaan@dnfp.cpm)

Aston Goad (aston.goad@dnfp.com)

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