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Legal Alerts

Share-Based Crowdfunding: An Alternative Method For Investors

Legal Alerts
Capital Markets

Recent Development

The Capital Markets Board (the “CMB“) issued the long awaited Communiqué on Share-Based Crowdfunding (the “Communiqué“). We discussed the Communiqué’s draft in our client alert dated January 11, 2019. The Communiqué entered into force upon its publication in the Official Gazette No. 30907 dated October 3, 2019.

What’s New?

  • The Capital Markets Law No. 6362 introduced crowdfunding as an alternative funding method for entrepreneurs on November 28, 2017. The Communiqué sets forth the rules and procedures for crowdfunding.
  • Entrepreneurs with innovative business plans can raise funds through crowdfunding. The process will be mediated through electronic crowdfunding platforms (the “Platform(s)“).

Crowdfunding Platforms

  • The crowdfunding processes will be conducted by crowdfunding platforms. Companies that will perform as Platforms are required to meet the conditions set out in the Communiqué. Within this scope, the Platforms must:
    • ​be added to the CMB’s list;
    • be established as a joint stock company;
    • have paid-in capital (ödenmiş sermaye) of at least TRY 1,000,000 and maintain this amount of paid-in capital and shareholders’ equity (özsermaye).
    • use the expression “Crowdfunding Platform” in its trade name;
    • establish a board of directors consisting of at least three directors.
    • have shareholders and directors who meet the conditions set out in the Communiqué; and
    • establish an investment committee in accordance with the requirements set out in the Communiqué.
  • Platforms are required to notify the CMB within five business days of any change in their shareholding structure. Further, they will also be required to have a transparent and open shareholding structure and make their current shareholding structure available to the investors in the Platform.
  • Platforms are required to notify the CMB within two business days if they no longer fulfil the aforementioned establishment conditions. The CMB is entitled to delist the relevant Platforms upon their notice.
  • In addition, the CMB is also entitled to delist the Platforms ex-officio for their non-compliance with the provisions of the Communiqué.
  • Platforms that the CMB removes from the list upon notice or ex-officio will be unable to apply to the CMB for re-listing to engage in crowdfunding for one year.
  • A written crowdfunding agreement regulating the principles of the process will be executed between the Platforms and venture capital firms (“VCF(s)“)/entrepreneurs.
  • Platforms are prohibited from engaging in (i) intermediary activities regarding loans or lending transactions in exchange for consideration or pledging an asset; and (ii) any crowdfunding activity based on a capital markets instrument (other than shares) or real estate. Crowdfunding activities in exchange for prizes or donations do not fall in the scope of the Communiqué.

Platform Membership

  • Investors must become a member of the Platform via website and execute a membership agreement to conduct crowdfunding transactions. In order to obtain a qualified investor membership, the member must have qualified investor status from the Central Registry Agency (“CRA”).

Investment Limits

  • Real persons who are not qualified investors may invest a maximum amount of TRY 20,000 within one calendar year. However, the investment limit can be set as 10% of the real person’s annual net income declared to the Platform, if it does not exceed the upper limit of TRY 100,000.
  • The CRA will monitor compliance with investment limits.


  • For VCFs to raise funds through share-based crowdfunding, they must (i) engage in technology and/or production activities; (ii) be established within the last five years as of the publication date of the information form (published in the Platform’s website, and which includes information on the VCF or entrepreneur, shares and any rights or privileges thereto); (iii) have certain financial items in their latest annual and/or most current interim financial statements that do not exceed the thresholds set out for exclusion from the scope of the law; and (iv) have a registered website.
  • Public companies, companies whose management belongs to another legal entity, and companies in which a public company or a capital market institution is a shareholder with material impact cannot conduct share-based crowdfunding.
  • Entrepreneurs and shareholders of VCFs cannot transfer their shares for three years from the starting date of the campaign process, except for cases specified in the Communiqué.


  • Funds raised from investors paid in full and cash will be transferred to the VCFs. In exchange, the VCFs’ shares issued pursuant to the capital increase made in the amount of the funds raised will be allocated to the investors. Further, VCFs cannot raise funds through the sale of their existing shares.
  • A VCF or an entrepreneur may only raise funds through Platforms with a maximum of two campaigns within any twelve-month period. The campaign process will begin as of the date of a VCF/entrepreneur’s application to a Platform. A new campaign process cannot be initiated unless the existing campaign process is completed.
  • The campaign term cannot exceed sixty days.
  • Funds raised from investors during the fundraising campaign will be blocked in an account opened with an escrow agent to be determined by the CMB. The campaign process will be deemed to be completed upon (i) the completion of the capital increase and transfer of the dematerialized shares to the investors’ accounts; or (ii) the return of the blocked amounts by the escrow agent to the investors if the targeted amount of funds cannot be raised. In addition, if the Platform is delisted, the relevant Platform will cancel the campaign and return the raised funds to investors.

Fund Utilization

  • The VCF or entrepreneur will prepare a report on how to utilize the funds to be raised. The report will be published on the Platform’s website as of the campaign’s starting date.
  • Raised funds cannot be used in the financing or purchasing of real estate, real estate property rights and real estate projects.
  • The VCF’s Board of Directors will be responsible to ensure that the funds raised through crowdfunding are used in accordance with the aim published on the Platform’s site.


Thanks to share-based crowdfunding, entrepreneurs will now have access to financing at no cost, while individual investors can combine their funds to help in the establishment of a new company.