Turkey: New Amendment To Address Reward-Based Crowdfunding And What To Expect

Last Updated: 8 December 2017
Article by Hazal Örnekol

A new omnibus code that amends, amongst others, the Capital Markets Code ("CMC") has been enacted by the Turkish parliament and published in the Official Gazette on 5 December 2017. With this amendment, Turkey joined the likes of the USA, UK, Italy, Canada, Sweden and several others who have been regulating crowdfunding for the past couple of years. The CMC amendment expands and somewhat clarifies crowdfunding in Turkey. While the amendment is regarded as an auspicious step towards growing and strengthening the crowdfunding market in the region, it still may not be time for start-ups, those looking for investment and investors to celebrate just yet.

New Changes

The CMC amendment primarily refers to reward-based crowdfunding (i.e. receipt of goods, reward or pre-sales in return or investment-based or loan-based crowdfunding) while donation-based crowdfunding where the investor donates the money with no return is still subject to aid and donations legislation. The said amendment limits crowdfunding to project or venture financing and only through crowdfunding platforms that are prior-recognised by the Capital Markets Board ("Board").

Under the legislation, crowdfunding platforms are limited to those operating electronically (note that no distinction is made between internet-based or otherwise platforms) that function as an intermediary between the investor and investee. Crowdfunding platforms can only operate in Turkey once they obtain the necessary permission from the Board. The Board will also issue its own set of by-laws which will regulate the constitution, shareholders, share transfers and employment matters of these platforms. One issue to highlight is that the Board will also regulate the maximum amount of investment each investor can make and each project or venture owner can collect. In addition, the Board will audit and control whether the fund collected is being utilised in accordance with the purpose of the project/venture as previously announced. In this regard, the Board's sanctionary powers are quite comprehensive as they range from issuing mere warnings to cancelling licences, filing criminal or civil complaints or "taking any precautions it may deem necessary". However, the wording of the amendment indicates that the primary precaution that the Board will take against those who receive funding without a licence is to restrict access to the relevant website.

Global Crowdfunding Market

An analysis prepared by Technavio predicts the global crowdfunding market to grow at a compound annual growth rate of approximately 27% by 2020. Other publicly available analysis agree that crowdfunding will continue to grow not only in the USA and UK but also significantly in EMEA and APAC regions and reach the volume of billions of American dollars by 2020. Crowdfunding has attracted the attention of not only start-ups but also other projects/ventures, of larger sizes and higher costs, following the global financial crisis. As banks and financial institutions has tightened their requirements on security and collateral and private investment became subject to increased bureaucracy, crowdfunding offered an alternative to many companies of different sizes. Today, real estate crowdfunding (including commercial and industrial properties) is a method used and growing in North America. Crowdfunding can also be used for large scale project financing, venture capital or ship financing as long as the applicable legislation does not inhibit its potential.

This potential is not only due to the current popularity of crowdfunding (which, in theory, can turn out to be a hype) but can also be partially attributed to the flexibility of the relationship between the investor and investee. The investor or investee can choose how the investors will be associated with or interact with the project or venture. However, the CMC amendment states that the relationship between the crowdfunding platforms, investors and investees will be subject to general provisions such as those under the Turkish Commercial Code or Turkish Civil Code. Although the application of this may seem practical as these pieces of legislation are well established and familiar for those within the legal industry, they may prove to be inadequate in addressing the intricacies of such a modern and liberal method of funding. In this regard, either the legislation (both existing and the new amendment) will prove to be inadequate or crowdfunding will be crippled by those who apply the law.

Room for Improvement

As mentioned above, the Board takes on the task to regulate almost every aspect of crowdfunding platforms and their operations. This is why the CMC amendment is not yet a reason to celebrate for those who prefer alternative investment methods. The said amendment raises eyebrows with the limitation it places on the amount of money that can be invested as well as the potential restrictions on the structure and mechanism for the transactions and potential disclosure obligations imposed on the crowdfunding platforms.

For instance, the CMC amendment distinguishes investment-based crowdfunding from open joint stock companies which are regulated heavily. However, although the amendment indicates that the crowdfunding platforms will not be subject to the same and heavy regulations as open joint stock companies, the regulations which they will be subject to are still unknown. As mentioned above, while reference to regulations/by-laws regarding employment, operational matters etc. is made, the amendment is silent regarding possible cross-overs with, for instance, securitisation/collateralisation in loan-based crowdfunding, taxation, fraud or money laundering, or data protection. The primary problem with crowdfunding in Turkey and the CMC amendment seems to stem from the legal framework that is lacking rather than existing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Sign Up
Gain free access to lawyers expertise from more than 250 countries.
Email Address
Company Name
Confirm Password
Mondaq Newsalert
Select Topics
Select Regions
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions