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Crowdfunding models in Turkey

Capital Markets Board of Turkey ("CMB"), authorized with the Capital Markets Law No. 6362 (the "Law"), legally accepted crowdfunding in Turkey in December 2017 by making amendments on the Law and following that, issued a communiqué concerning equity-based crowdfunding model that took effect on 3 October 2019, Communiqué on Equity Based Crowdfunding No. III-35/A.1 (the "Communiqué").

With this Communiqué, CMB regulates solely the equity-based crowdfunding of technology and production driven projects and leaves out the real estate-based crowdfunding as it is expressly forbidden under the Communiqué. Donation-based and reward-based crowdfunding models are left outside the scope of the Communiqué and however, these models continue to be practiced in Turkey subject to the general laws and regulations relating to reward and donation notions.

Lending Based Crowdfunding

With the recent amendments made in the Law, through the Law No. 7222, Amending the Banking Law and Other Codes, published in the Official Gazette dated 25 February 2020, CMB becomes entitled to designate either the use of either equity-based or lending-based crowdfunding model for the respective campaign and this way, the gateway for lending-based crowdfunding, having the largest funding volume in global sense, as a fundraising model is opened as well. In the same amendment, CMB also clarified that banking legislation is not applicable to lending-based crowdfunding. There is no secondary legislation issued by CMB yet that explains the dynamics of lending-based crowdfunding, however, it is expected in the near future.

Below, we will outline the general aspects of the Communiqué concerning equity-based crowdfunding model in Turkey.

Equity Based Crowdfunding

In the equity-based crowdfunding model, the fundraiser can either be an individual or a legal entity (i.e. startup company), having a technology or production driven project or venture. The crowdfunding platform enables a group of investors to fund the project or venture of the fundraiser. Investors may subscribe to these online platforms and invest for the project or venture they wish within the legal limits as prescribed by the Communiqué.

Crowdfunding platforms are required to be incorporated in the form of a joint-stock company with a share capital of at least 1 (one) million Turkish Liras all-paid up, and also, required to meet certain other criteria as prescribed in Article 5 of the Communiqué. The crowdfunding platforms are regulated by CMB and therefore, these platforms need to be authorized and listed by CMB to carry out crowdfunding activities.

As for the crowdfunding platforms resident abroad, Turkish residents are free to participate in the campaigns published by the foreign crowdfunding platforms based on their own will (reverse solicitation principle) unless such foreign platform markets its services towards Turkish residents by opening work places in Turkey, launching a website in Turkish or marketing through Turkish resident persons or companies without having any license obtained from the CMB in accordance with Communiqué on the Principles of Investment Services and Ancillary Services No. III-37.1.

Campaigns, Funding and Share Distribution

Crowdfunding is launched via campaigns, which initiate the process of collecting funds from investors for eligible projects approved by the platform investment committee. Once the project is approved, the campaign kicks-off for the respective project. The campaign stays on the platform for 60 (sixty) days at most during which investors electronically subscribe to the platform and deposit their contributions through the platform. For each campaign, platform publishes on its website the project details through an information form and the funding purpose through a report.

CMB brought certain funding limits for investors. Non-qualified investors may invest a maximum amount of TRY 20,000 within one calendar year. However, this limit may be increased by up to 10% of an investor's declared net income, in any case, this investment limit is capped with TRY 100,000. These limits are not applicable to qualified investors. Notwithstanding, it is important to note that investors are entitled to withdraw their contribution to the campaign within 48 (forty-eight) hours as of the day the payment order is served without any reason.

As for the funds collected, the entrepreneur is required to open an account at an escrow agent, so that the collected funds are transferred to such account and blocked until the campaign is finalized. Once the investment target is reached, (i) if the project owner is a legal entity, such shall conduct a share capital increase in the amount of fund collected during the campaign to issue the shares representing the collected funds or (ii) if the project owner is an individual, such shall initially establish a company and then conduct a share capital increase to issue the shares representing the collected funds. Upon such share capital increase, investors will become the shareholders of the start-up pro rata to their contributions and each of their shares in dematerialized form will be transferred to their accounts held at Central Securities Depository (CSD). Meanwhile, the funds blocked with the escrow agent will be transferred to the start-up company.

Disclosure and Independent Audit

CMB requires the periodic disclosure of the information regarding the financial status of the project and use of funds in the crowdfunding platform’s website for the following 5 (five) as of the year the campaign is closed. In addition to this, as required in the Communiqué, an independent audit company authorized by CMB inspects the use of funds and evaluates whether the collected funds are utilized in line with the project's goals. For this, independent audit company prepares a special purpose audit report until the date the funds are completely used, to check and control whether funds are used in compliance with the purpose of the project and in case of any misuse, this will be reported to the CMB.


The equity-based crowdfunding model will be used to finance wide variety of projects and ventures with a potential capital gain and also, enable funders to buy a participation in the start-ups. Speaking of the Communiqué, however, the efficiency of this model still requires a more flexible approach from the regulator on certain criteria and standards introduced thereof. In the meantime, as expected by the market players, CMB permitted lending-based crowdfunding, as it is an effective fundraising method and expected to bring positive financial return for the funders and contribute to the evolution of the financial system in Turkey.

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