Crowdfunding has deep roots in the Turkish culture. Many Turkish entrepreneurs turn to their families and friends who are generous investors. If a friend wants to invest in a business, his/her friends usually chip in. In villages, people share daily works and call it “imece.”
That’s why I always wondered why we lag behind so much in terms of crowdfunding rules, regulations and technologies.
In many countries, with platforms like Kickstarter, you can raise money from complete strangers for any type of project that you would like to realize. In some of these countries, like the U.S. and the UAE, you can even lend money at a peer to peer level. Some people prefer this because people charge lesser interests than banks.
So when I got an email from Esin Attorney partnership outlining the new proposed legislation about crowdfunding, I got really excited and wanted to share the news with you.
Recently, a draft bill was submitted to parliament to authorize the Capital Markets Board (CMB) to regulate crowdfunding within the Capital Markets Laws. The changes to the Capital Markets Law No. 6362 were published in the Official Gazette on Dec. 5, and the CMB is now authorized to pass the secondary regulations to further regulate crowdfunding. The new regulations are as follows:
• The CMB is authorized to regulate crowdfunding within the boundaries of the law.
• Crowdfunding is defined as collecting funds from the public through crowdfunding platforms to fund a project or a company. The activities falling within this definition are not considered a public offering and those who collect funds through crowdfunding platforms are not considered issuers.
• Crowdfunding platforms are “entities that intermediate crowdfunding and operate electronically.”
• Crowdfunding platforms licensed by the CMB will be entitled to collect funds without preparing any offering circulars or issuance certificates.• The establishment and operation of crowdfunding platforms will be subject to the CMB’s approval. The CMB will determine the rules and procedures applicable to establishment, shareholders, share transfers, employees, the maximum funding limits for one individual and fund collection for one project or company, operations, monitoring, and supervision.• Crowdfunding activities are not considered investment services.
• The CMB can request the restriction of site access to websites used for illegal crowdfunding.
Following the introduction of these amendments, all eyes are now on the CMB for further guidance. Crowdfunding platforms will provide entrepreneurs and investors a structured investment environment wherein fundraising is less bureaucratic, more accessible, and considerably faster.
If everything goes smoothly with this new bill, it will be a game changer. People will no longer have to rely on immediate family and they will no longer have to suffer at the hands of banks.
This could trigger a lot of innovation in Turkish markets.