The Law relating to Amendments to Certain Tax Laws and Other Laws (the “Omnibus Law”) introducing the concept of the crowdfunding platforms, was published in the Official Gazette dated December 5, 2017.
Crowdfunding (Kitle Fonlama) is the practice of financing a project or a venture by raising funds from a large number of individuals typically through an online platform. The Omnibus Law defines crowdfunding platforms (kitle fonlama platformu) as institutions acting as an intermediary for crowdfunding purposes and providing services through an electronic platform.
The crowdfunding platforms shall obtain the authorization of the Capital Markets Board (the “CMB”) prior to its incorporation. The CMB shall determine all details relating to incorporation, shareholders, share transfers, employees of such platforms and the maximum limit of funds which may be collected from fund providers, project owners and venture capital companies, as well as other procedures and principles relating to its operations and principles to determine if the funds are used for the purposes announced to public.
Collecting funds from public through crowdfunding shall only be conducted through the crowdfunding platforms authorized by the CMB, provided that such funding complies with the legislation relating to donations and aid. There is no requirement to prepare a domestic offering circular (izahname) or to apply to the CMB for an issuance certificate (ihraç belgesi) for crowdfunding. Crowdfunding corporations will not be qualified as a publicly held company even if the number of their shareholders exceeds 500.
Upon determination of illegal operations and transactions of the crowdfunding platforms, the CMB may provide a cure period for compliance to applicable law or directly restrict the scope and activities of the platform or suspend the platform for a temporary period, cancel its authorizations or take other precautions deemed necessary. Procedures provided under the Capital Markets Law will be applicable to the managers and employees who are accountable for such illegal operations or activities of crowdfunding platforms. Lastly, upon being informed that platforms are raising money from public or are engaging in leveraged financing to Turkish residents from abroad via online resources and in derivative transactions subject to the legislation applicable to leveraged financing, without obtaining an authorization from the CMB, the Information and Communication Technologies Authority (Bilgi Teknolojileri ve İletişim Kurumu) shall ban access to such online platforms upon CMB’s request.
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