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Legal Alerts

2-in-1 Crowdfunding: Debt-Based and Share-Based Crowdfunding Regulated under One Single Communiqué

Legal Alerts
Capital Markets

Recent Development

The Capital Markets Board’s (“CMB“) Communiqué No. III.-35/A.2. on Crowdfunding (“Communiqué“) entered into force upon its publication in the Official Gazette No. 31641 and dated October 27, 2021. As previously discussed in our Legal Alert dated August 31, 2021, the CMB submitted a draft version of the Communiqué (“Draft Communiqué“) to public opinion on August 26, 2020.

The Communiqué regulates the principles of the long-awaited debt-based crowdfunding and also introduces certain amendments in response to issues regarding share-based crowdfunding that arise from market practices.

What Does the Communiqué Say?

Crowdfunding Platforms

Crowdfunding activities will be conducted via crowdfunding platforms, which can be a joint stock company solely providing crowdfunding services; or investment institutions that are development and investment banks, participation banks, or intermediary institutions.

The CMB requires all platforms to be CMB licensed.

Platforms’ Activities

  • As a general rule, platforms will be able to carry out solely share-based and/or debt-based crowdfunding activities. However, development and investment banks, participation banks and intermediary institutions will be exempted from this condition.
  • The principles to be followed during crowdfunding activities will be set out in a written crowdfunding agreement to be executed between the fundraisers and the platform.
  • An information memorandum will be prepared for each campaign, which must be disclosed on the campaign page during the term indicated under the Communiqué. The memorandum must include information that a concrete and rational investor may consider important when making an investment decision and that may affect the investment decision.
  • Funds collected from investors will be maintained by an escrow agent until the campaign is completed.
  • The Communiqué also regulates the platform’s prohibited activities in detail. For instance, platforms are prohibited from carrying out crowdfunding activities to collect funds from persons residing in Turkey for persons residing abroad; platforms engaging only in share-based crowdfunding activities are prohibited from lending activities in return for interest or any other revenue or by taking security interests; and they are prohibited from carrying out crowdfunding activities in return for any capital market instrument other than shares.

Investment Limits

According to the Communiqué, real persons who are not qualified investors will be able to invest a maximum of TRY 50,000 in a calendar year through debt-based and share-based crowdfunding activities. However, this limit may be applied as 10% of the annual net income of the real person, provided that the investment does not exceed TRY 200,000. Moreover, real persons that are not qualified investors may only invest a maximum of TRY 20,000 into a single project.

Fundraising and Use of Fund Proceeds

i) Share-Based Crowdfunding

  • The funds may only be transferred to the funded company in return for new shares to be issued through a rights issue, and funds cannot be collected through the sale of existing shares of the company.
  • For fund collection targets that exceed TRY 1,000,000, the amount corresponding to at least 5% of the target must be met by qualified investors during the campaign period.
  • For share-based crowdfunding activities, a use of proceeds report will be prepared and disclosed on the campaign page as of the start date of the campaign.
  • The control and supervision of the use of collected funds will be carried out by independent audit firms that will prepare a special independent audit report.

ii) Debt-Based Crowdfunding

  • Funds will be collected by issuing a debt instrument or in exchange for any capital market instrument other than a debt instrument.
  • The interest rate and other rate of return cannot exceed more than 50% of the weighted average interest rates of two government bonds with the closest maturity dates to the relevant debt instrument: one with a maturity shorter than the relevant debt instrument, and the other with a maturity longer than the relevant debt instrument. The maturity cannot exceed five years.
  • The revenues of the funded project will be used primarily for payments to be made to investors and the funds may not be used for the payment of debts that are unrelated to the funded project.
  • The investment committee will verify whether the collected funds are used in accordance with the use of proceeds.
  • In debt-based crowdfunding, repayment obligations of debt instruments can be given as the funded company’s share instead of cash or fulfilled as specified in the information memorandum.

Fund Raisers

Companies that intend to raise funds via crowdfunding activities will need to meet, among others, the following criteria:

  • Engage in technology activities and/or production activities and 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
  • Be established as a joint stock company or convert into a joint stock company before the transfer of the collected funds.

Public companies and companies in which a public company or a capital market institution is a shareholder with a material impact will be prohibited from conducting share-based crowdfunding activities. Public companies and issuers that have issued debt instruments that are not redeemed as of the date of application to the platform; and companies in which an issuer with unredeemed debt instruments is a shareholder with a material impact as of the date of application to the platform will be prohibited from conducting debt-based crowdfunding activities.

Funds can be raised by a fund raiser or an entrepreneur in a twelve-month period, with a maximum of two share backed or debt backed campaigns through platforms. In addition, a new debt-based or share-based campaign process cannot be initiated by the same entrepreneurs before the campaign process for share-based and debt-based crowdfunding is completed. However, a debt-based campaign can be conducted while the share-based campaign process continues (and vice-versa), and if the targeted funds cannot be collected in any of these campaign processes, the other campaign process will also be terminated.


With the Communiqué, the CMB consolidates the long-awaited principles of debt-based crowdfunding with share-based crowdfunding under one single communiqué.

The Communiqué paves the way for small or medium size tech and production companies to raise funds from capital markets without publicly offering shares.