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  • Writer's pictureKılıç Çaylı & Partners

A New “Exit” Market for Venture Capitalists and Investment Funds: Venture Capital Market

Communiqué on Principles Regarding the Companies whose Shares will be Traded on the Venture Capital Market (II-16.3)

A New “Exit” Market for Venture Capitalists and Investment Funds: Venture Capital Market

On March 18, 2023, the "Communiqué on the Principles Regarding the Corporations whose Shares will be Traded on the Venture Capital Market (II-16.3)" ("Communiqué") was published in the Official Gazette dated March 18, 2023, and numbered 32194 and entered into force.[1]

The Communiqué regulates the procedures and principles regarding the sale of the shares of non-publicly traded companies to be issued through capital increases to be traded on the Venture Capital Market ("VCM") to qualified investors without public offering and the obligations and exemptions of such companies.

What Is the Purpose Of The Communiqué in Terms of Capital Markets Legislation?

The Communiqué envisages the establishment of a new VCM under Borsa Istanbul with the new VCM, the Capital Markets Board ("CMB") aims to create a secondary market. It is envisaged that the possibility of selling the shares of the corporations to be traded on the VCM only to qualified investors[2] will facilitate access to qualified investors for corporations intending to raise funds in this secondary market.

In addition to facilitating access to funds, we believe that the secondary market introduced by the Communiqué should be considered a positive development in terms of revitalizing the capital market and providing a dynamic market environment by enabling the sale of shares that cannot be traded due to the fact that they are not currently publicly traded.

An important "exit"[3] alternative has emerged for investment capitalists such as venture capital investment funds, development banks, and private equity firms that hold a significant amount of shares of unlisted companies in their investment portfolios. Such structures were having difficulties in selling the investments in their portfolios, which had a very high growth and appreciation potential, but did not meet the criteria for public offering; on the other hand, their share value was relatively high for block share sales and they had difficulty in realizing the return of the increase in value.

In What Ways Do the Public Offering and the Sale of Shares in the VCM Market To Qualified Investors Differ?

First of all, it should be noted that the corporations whose shares will be sold to qualified investors in the VCM, just like the corporations that will be offered to the public for the first time, must have their registered capital fully paid up.

The main difference between an initial public offering and trading on the VCM arises in terms of the conditions stipulated for these transactions. An analysis of the conditions set forth in the Communiqué for the trading of shares in the VCM reveals that the Communiqué envisages a simplified process compared to a public offering.

For example, in order to be able to sell their shares to qualified investors in the VCM, companies must have financial statements for the year preceding the year in which the shares will be offered for sale, prepared in accordance with the regulations of the Capital Markets Board ("Board") and audited by a special independent auditor;

  • Total assets of at least 20 million TRY,

  • Net sales revenue of at least 10 million TRY,

  • In order to switch to the registered capital system, the registered capital must be at least 10 million TRY and fully paid up.

  • For the companies to be offered to the public for the first time;

  • In the financial statements dated 2021, total assets must be at least 300 million TRY, and in the financial statements dated 2022, total assets must be at least 450 million TRY,

  • In the 2021 financial statements, net sales revenue must be at least 180 million TRY; in the 2022 financial statements, total assets must be at least 270 million TRY.

As can be seen, the financial limits foreseen for the two different methods differ significantly. In this framework, the VCM facilitates the sale of shares to qualified investors.

What Are the Differences Between the Public Offering and the Sale of Shares in the VCM Market to Qualified Investors in Terms of Restrictions?

The most important restriction that companies are subject to after going public is the restriction on shareholders. Accordingly, shareholders who hold %10 or more of the existing capital and shareholders who control the management may not sell their shares on the stock exchange at a price below the public offering price for a period of one year following the commencement of trading of the shares on the stock exchange, or may not cause any transaction that would result in such a result.

In terms of the sale of partnership shares to qualified investors in the GSP market; it is prohibited to sell these shares by public offering before the completion of 2 years following the year in which they started to be traded on the stock exchange. In this sense, it is considered that it is aimed to ensure that the shares to be sold to qualified investors in the VCM market are traded stably in the secondary market.


With the Communiqué, the shares of non-public joint stock companies to be issued through capital increases can be sold to qualified investors and traded on the Venture Capital Market of Borsa Istanbul without a public offering.

We believe that subjecting the companies whose shares will be traded in the secondary market to simplified conditions compared to the public offering process should be considered as a positive development in terms of making the capital market a more dynamic environment and diversifying the exploration and investment opportunities of venture capital investors.





[1] The full text of the Communiqué is available here. [2] A qualified investor is defined as "professional customers, including those who are defined in the Board's regulations on investment institutions and who are deemed professional based on demand". Mutual funds, pension funds, securities investment trusts, venture capital investment trusts, real estate investment trusts, brokerage houses, banks, insurance companies, private financial institutions, portfolio management companies, pension and relief funds, foundations, funds established pursuant to the provisional article 20 of the Social Security Law No. 506, Public benefit associations and other investors to be determined by the Board to be similar to these institutions in terms of their qualifications, and real persons and legal entities holding Turkish and/or foreign money and capital market instruments amounting to at least TRY 1 million as of the date of public offering are among the qualified investors. [3] "Exit" is a term used in private equity and venture capital markets. It refers to the sale of the Company's shares, which are purchased with the expectation of appreciation, to third parties after being held in the portfolio for a period of time. A successful "exit" is considered to be when the shares are sold at a premium to the initial price and a positive return is realized.


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