In 2017, the Blanket Law numbered 7061 had introduced equity crowdfunding into the Capital Markets Law, as an alternative way to raise capital alongside formal offerings and granted the CMB authority to issue more detailed secondary legislation.
The Capital Markets Board (the "CMB") has now opened a draft of its Communiqué III-35/A.1 on Equity Crowdfunding (the "Draft Communiqué") for public comment and consultation.
In general, crowdfunding is an alternative financing method typically used by start-ups and entrepreneurs to raise small amounts of capital from a large and diverse investor base by leveraging the wide reach of social media and other web-based platforms. In equity-based crowd-funding, investors receive equity interest in the business or venture being funded.
For the time being, amounts raised by crowdfunding on an individual basis may rate more modestly in comparison to more traditional forms of financing. However, there is potential for exponential growth over and through the next decade. According to a study commissioned by the World Bank, crowdfunding's global market potential is expected to reach USD95 billion per year, by 20251.
The Draft Communiqué
The Draft Communiqué regulates the establishment, administration and regulatory oversight of crowdfunding platforms (the "Platforms"), where crowdfunding campaigns will be conducted.
The Draft Communiqué requires Platforms operators to be established in the form a joint stock company (anonim şirket) and have paid-in regulatory capital of not less than TL1 million, among other operational and founder-integrity requirements customary in financial services regulations.
According to the Draft Communiqué, crowdfunding-eligible sectors are technology and production and real estate investments are expressly excluded. The Draft Communiqué also provides that crowdfunding campaigns must be domestic, and that foreign projects and/or ventures will not be eligible for funding through the Platforms, though an unsolicited investment exemption is provided for Turkish residents intending to invest in foreign crowdfunding campaigns.
Funding will need to be made to an appointed custodian, subject to a 48-hour optional walk-away right for investors, and pending their final release to the venture company.
The CMB will close the Draft Communiqué for public comment on 4 February 2019. All stakeholders are invited to provide comments and suggestions to the CMB through its official website by such date.
1 A copy of the WorldBank study can be accessed through
the following link:
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