Our recent alerts dated October 10, 2017 and October 31, 2017 announced the submission of a draft bill to Parliament to authorize the Capital Markets Board (the "CMB") to regulate crowdfunding within the capital markets laws. The changes to the Capital Markets Law No. 6362 (the "Law") were published in the Official Gazette dated December 5, 2017 and the CMB is now authorized to pass the secondary regulations to further regulate crowdfunding.
- 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 with a structured investment environment wherein fundraising is less bureaucratic, more accessible, and considerably faster.