By way of background, in January 2019, the Capital Markets Board (“CMB”)

had issued an announcement on its website on the Draft Communiqué on Equity Crowdfunding[1]. The CMB

has now officially published the Communiqué on Crowdfunding No. III-35/A (“Communiqué”),

on October 3, 2019. The Communiqué entered into force as of October 3, 2019.

[1]http://www.mondaq.com/turkey/x/769986/Fund+Management+REITs/Capital+Markets+Board+Announces+The+Draft+Communiqu+On+Crowdfunding

The Communique appears to be in line with its draft, and addresses several

main topics such as, (i) crowdfunding platforms, (ii) activities of

crowdfunding platforms, (iii) subscription to crowdfunding platforms and the

campaign process and (iv) areas for the use of the funds and venture capital

firms.

The Communique requires crowdfunding platforms to apply to CMB for

listing and to comply with specific requirements. For instance, a crowdfunding

platform must be established as a joint stock company with a fully paid minimum

capital of TL 1,000,000 and must include “Crowdfunding Platform” in its trade

name. Per the Communiqué, crowdfunding platforms cannot carry out activities

other than crowdfunding, except for consultancy services to be provided to venture

capital firms. They are also required to establish a campaign website for each venture

capital firm or project and provide periodical updates for a period of 5 years,

in addition to instantaneous updates on the target and remaining amount of

funds to be collected, number of investors and the remaining period for each

project.

The Communiqué determines a maximum limit of TL 20,000 or 10% of the

investor’s declared yearly net income (which cannot exceed TL 100,000) for the

amount each investor may invest in a given project within one year, and the

maximum amount of funds project owners and venture capital firms may raise

through crowdfunding: this is limited to the issue threshold announced by the

CMB through its annual bulletin. The Communiqué also limits crowdfunding

platforms’ promotional activities, where crowdfunding platforms can only promote

completed projects and/or achieved venture capital firms within their advertisements

and other promotional activities.

As for the platforms located outside Turkey, the Communiqué excludes crowdfunding

activities participated by Turkish citizens through platforms which are located

outside of Turkey, and the accounts which are opened and operated abroad for

this purpose, on the condition that no promotional or marketing activity has

been carried out for these crowdfunding activities in Turkey, in a manner that

targets residents in Turkey. For the purposes of this exclusion, establishing a

workplace in Turkey by foreign platforms, establishing a Turkish website,

directly or indirectly, through persons or institutions resident in Turkey,

promoting crowdfunding activities will be deemed as “activities that target

residents in Turkey” and will fall under the scope of the Communiqué.