Open a Crowdfunding Company in Turkey

Foreign investors who want to open companies in Turkey have several performant industries they can operate in. Among these, the fintech sector has gained popularity in Turkey just like in other European countries, as the government also issued a new law related to completing various activities in this field.

Setting up a crowdfunding company is perhaps one of the best ideas for starting a business in Turkey under the new law. Below, our company formation specialists in Turkey explain the requirements related to starting a crowdfunding business. You can rely on us for assistance in registering a crowdfunding business in Turkey.

The concept of crowdfunding

Crowdfunding implies gathering funds for a specific project (usually an innovative one) by gathering small amounts of money from a large number of persons. Most of the times, the funds are raised via the Internet through specialized platforms where the project is presented, or better said promoted.

Crowdfunding is also regarded as an alternative source of financing with the great benefit that it implies less paperwork than when contracting a loan with a bank.

Nowadays, crowdfunding has become quite popular in Turkey, which is why at the end of 2017, the government has amended the Capital Markets Law with new provisions related to crowdfunding.

Legislation on crowdfunding in Turkey

In December 2017, the Turkish government issued an amendment to the Capital Markets Law, amendment number 6362, through which equity crowdfunding was introduced in the national legislation.

The amendment provides for the following:

1. a new definition for crowdfunding and the principles under which crowdfunding platforms will operate;
2. crowdfunding platforms must obtain an authorization from the Capital Markets Board (CMB);
3. such platforms will not operate as investment companies, nor as portfolio management companies;
4. the share capital and name requirements when setting up a crowdfunding platform;
5. provisions related to startup companies and membership on a crowdfunding platform.

Our Turkish company formation agents can offer more information on the legislation related to crowdfunding.

Requirements for opening a crowdfunding platform in Turkey

Those who want to operate crowdfunding platforms in Turkey must first register companies with the Trade Register. Upon the opening of the company, the following requirements must be respected:

• - the company must take the form of a joint stock company and its shares must be issued as registered shares;
• - the minimum share capital of the platform is 1,000,000 TRY and must be deposited in full upon company registration in Turkey;
• - the platform must have the words ‘crowdfunding platform’ appended to its trading name;
• - the platform must have an investment committee and must obtain the approval of the CMB.

Our local consultants can help foreign investors who want to set up crowdfunding companies in Turkey to register joint stock companies which meet the requirements imposed by the Turkish Capital Markets Board.

How to operate a crowdfunding platform in Turkey

According to the law, crowdfunding companies must comply with a few requirements in order to help startup companies gather funds for their projects. The first thing to consider is that a startup company in Turkey must enter a membership contract with the platform. The startup must be registered for at least 2 years in order to be promoted on the platform. Also, its activities must be related to technology or manufacturing.

Considering a crowdfunding company in Turkey must have members who invest in projects, membership can be acquired based on the compliance with the following requirements:

• - the platform can accept both qualified or professional and non-professional investors through a membership agreement;
• - non-professional investors cannot donate more than 20,000 TRY to a project;
• - once the whole amount of money is gathered, it will be transferred to the startup company under the form of an increase in the share capital;
• - the expenditure of the funds gathered by the startup will be supervised by the CMB.

According to recent statistics, crowdfunding in Turkey:

• - is forecast to have a transaction value of 14,9 million USD in 2019;
• - the value mentioned above is expected to bring an annual growth rate of 12% (between 2019 and 2023) and thus register a total amount of 23,4 million USD by 2023;
• - the average amount of money raised per campaign through crowdfunding is 680 USD (in 2019);
• - at a global level, the highest amount of money was raised in China in 2019 and was 5,576 million USD.

If you want to set up a crowdfunding company in Turkey and need assistance, please contact our company registration agents.