In our recent alert dated October 10, 2017, we mentioned that the Capital Markets Board (the "CMB") will regulate crowd funding. A draft bill submitted to the Parliament sheds light on the details.
- The Capital Markets Law No. 6362 (the "Law") will define crowdfunding, thereby introducing a new type of funding method. Electronic crowdfunding platforms (the "Platforms") will be formulated to mediate the process. Raising funds through the Platforms will be out of the scope of "public offering". In this respect, those who collect funds through Platforms will not be regarded "public companies" or "issuers" and they will be not be required to have an offering circular or an issue certificate. Crowdfunding will not be considered "investment service". The Platforms to be created upon the CMB's approval will not be subject to the regulations applicable to exchanges, market operators and other organized markets.
With the proposed amendments to the Law, the Platforms will provide entrepreneurs and investors with a structured investment environment. In this way, young entrepreneurs having innovative business plans will have chance to be supported by the investors. As crowd funding will be out of the scope of public offering, much less bureaucratic and quicker fundraising will be possible.