I. What is Venture Capital Investment Partnership?

Venture Capital Investment Partnerships ("VCIP") are regulated under the Communiqué on Principles of Venture Capital Investment Partnerships ("VCIP Communiqué"). Pursuant to Article 4 of the VCIP Communiqué, a VCIP is a capital market institution that is a joint stock company subject to the registered capital system, which is established or transformed through amendment of the articles of association in order to issue shares to operate a portfolio consisting of venture capital investments, capital market instruments and other assets and rights to be determined by the Capital Markets Board ("CMB") within the framework of the procedures and principles set out in VCIP Communiqué, and may engage in other activities permitted by VCIP Communiqué, provided that they are within the framework of the activities limited by Article 48 of the Capital Markets Law.

II. What are the Activities of VCIP?

  • They may make venture capital investments within the framework of the principles set forth in the VCIP Communiqué. In order to diversify their portfolios other than venture capital investments, they may invest in capital market instruments traded or issued to be traded on the stock exchange, reverse repo transactions on the stock exchange, Takasbank Money Market transactions and TL and foreign currency demand or time deposit accounts and participation accounts with mutual fund participation shares. Except for mutual fund participation shares, trading of capital market instruments must be made through the stock exchange.
  • They may participate in the management of venture companies in their portfolios.
  • They may provide consultancy services to the venture capital companies in their portfolios.
  • They may become partners of consulting companies established in Turkey and abroad in order to provide consultancy services for venture capital activities in Turkey.
  • They may become shareholders in portfolio management companies established in Turkey and in portfolio management companies established abroad but whose scope of activity is only venture capital companies established in Turkey.
  • They may provide market advisory services in the BIAS Emerging Companies Market.

III. What are the Requirements for the Establishment of VCIPs?

An institution may be established as a VCIP, or it may be established as a joint stock company and subsequently transformed into a VCIP.

The conditions for the establishment and conversion of a VCIP are set out in Article 5 of the VCIP Communiqué. According to this article, the conditions for establishment and conversion are as follows:

  • Foundation as a joint stock company with registered capital, being a joint stock company with registered capital, or being a joint stock company subject to the registered capital system and applying to the CMB to switch to the registered capital system,
  • In case of incorporation, the initial capital, and in case of transformation, the current paid-in or issued capital and shareholders' equity in the financial statements being prepared and independently audited in accordance with the CMB regulations, each of which is not less than TL 20,000,000,
  • Issuance of shares with cash and full and cash payment of the share prices in the establishment and transformation,
  • The phrase "Venture Capital Investment Partnership" in the trade name,
  • Founding partners or existing partners fulfilling the conditions stipulated in the VCIP Communiqué,
  • Its articles of association being in compliance with the provisions of the relevant legislation or to apply to the CMB to amend its existing articles of association in accordance with the provisions of the relevant legislation,
  • The members of the board of directors and the general manager fulfill the conditions stipulated in the VCIP Communiqué,
  • It has been committed to the CMB that 25% of the initial capital/issued capital shares will be offered to the public or sold to qualified investors within the period and principles specified in the VCIP Communiqué, and
  • At least one of the founding or existing shareholders must be the lead shareholder.

IV. What are the Requirements to Become a Founder or a Shareholder of a VCIP?

  • Not being a bankrupt, not having declared concordat or not having been granted a postponement of bankruptcy,
  • In organizations, one of the operating licenses of which has been revoked by the CMB, not to be one of the persons responsible for the event requiring this sanction,
  • No finalized conviction for offenses written in the law,
  • The liquidation decision has not been taken for themselves or the organizations in which they are a shareholder according to the Decree Law on the Transactions of Bankers in Insolvency dated 14/1/1982 and numbered 35,
  • Even if the periods specified in Article 53 of the Turkish Penal Code dated 26/9/2004 have elapsed; not being convicted for five years or more for a crime committed deliberately or for crimes against the security of the state, crimes against the constitutional order and the functioning of this order, embezzlement, extortion, bribery, theft, fraud, forgery, abuse of trust, fraudulent bankruptcy, bid rigging, not having been convicted of the crimes of rigging of the performance, blocking, disrupting, destroying or altering the information system, misuse of debit or credit cards, laundering the assets arising from the crime, smuggling, tax evasion or obtaining unfair property,
  • Providing the necessary resources for the establishment of the partnership as a result of their own commercial, industrial and other legal activities, free of any collusion, and having the financial strength to meet the amount of capital they have committed,
  • Have the integrity and reputation required by the job,
  • No tax debt due,
  • Not being convicted of offenses regulated in the Law on the Prevention of Financing of Terrorism dated 7/2/2013 and numbered 6415, and
  • Must not be prohibited from trading pursuant to subparagraph (a) of the first paragraph of Article 101 of the Capital Markets Law.

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.