FRIDAY
, February 15, 2013 Official Gazette
No. 28560
REGULATION
ON INDIVIDUAL PARTICIPATION CAPITAL PART
I Purpose, Scope, Legal Basis and Definitions
Purpose and Scope
ARTICLE 1 – (1) The purpose of this Regulation is to support individual participation capital—a financial instrument for startups or growing businesses that face difficulties in accessing financing due to high risk—and to regulate the activities of individual participation investors and persons, institutions, and organizations subject to the additional Article 5 of the Law No. 4059 on the Organization and Duties of the Undersecretariat of the Treasury, dated 9/12/1994, No. 4059, on the Organization and Duties of the Undersecretariat of the Treasury, regarding the monitoring, auditing, and termination of their activities.
Legal Basis
ARTICLE 2 – (1) This Regulation has been prepared pursuant to Article 5 of the Annex to the Law on the Organization and Duties of the Undersecretariat of the Treasury.
Definitions and Abbreviations
ARTICLE 3 – (1) The terms used in this Regulation shall have the following meanings:
a) Accreditation: The authorization of individual participation investor networks by the Undersecretariat pursuant to Article 5 of the Annex to the Law;
b) Individual Participation Capital (BKS): The cash capital transferred by individual participation investors to companies under this Regulation;
c) BKS Legislation: Transitory Article 82 of the Income Tax Law No. 193 dated December 31, 1960; Article 5 of the Annex to the Law on the Organization and Duties of the Undersecretariat of the Treasury; this Regulation; and other relevant legislation;
d) Individual Participation Investor (BKY): Natural persons who contribute their personal assets and/or experience and expertise to companies in the startup or growth phase;
d) Individual Participation Investor Network (BKY Network): A platform where entrepreneurs meet with Individual Participation Investors, established in accordance with the Turkish Civil Code No. 4721 dated November 22, 2001, the Turkish Code of Obligations No. 6098 dated January 11, 2011, or the Turkish Commercial Code No. 6102 dated January 13, 2011,
e) Individual Participation Investor License (BKY License): A document issued to BKYs that meet the criteria determined by the Undersecretariat and enabling them to benefit from state support,
f) Entrepreneur: Natural or legal persons who wish to establish or have established their own business based on a business idea,
g) Startup company: A joint-stock company in which BKYs have invested capital as partners for the purpose of making investments,
h) Business plan: A plan submitted by a BKY to the Undersecretariat that outlines the sector and activities to be invested in within a
2-calendar-year
timeframe,
ı) Law: The Law No. 4059 on the Organization and Duties of the Undersecretariat of the Treasury, dated December 9, 1994,
i) Board: The Presidency of the Board of Treasury Controllers,
j) Undersecretariat: The Undersecretariat of the Treasury,
SECTION
TWO Eligibility for State Support and Licensing
Eligibility
for State Support ARTICLE 4 – (1) To benefit from tax support under Transitional Article 82 of the Income Tax Law, BKYsmust meet the criteria specified in this Regulation by the Undersecretariat and must hold the equity shares of the fully taxable startup companies they have acquired for at least two full years. The two-year period begins on the date the cash capital is deposited into the partnership bank account opened in the name of the startup company under Article 25. For the two-year period to commence and for the capital committed by the BKY to be eligible for tax support, the relevant committed amount must be deposited in cash into the partnership bank account.
(2) BKYs may deduct 75% of the value of the shares, calculated in accordance with the valuation provisions of the Tax Procedure Law No. 213 dated January 4, 1961, from the income and earnings reported in their annual tax returns for the period in which the shares were acquired. Under research, development, and innovation programs determined by the Ministry of Science, Industry and Technology, the Scientific and Technological Research Council of Turkey, and the Small and Medium-Sized Enterprises Development and Support Administration, this rate applies at 100% for BKYs that hold equity in startup companies whose projects have been supported within the last five years, as of the date of application to the Undersecretariat for tax support. The annual deduction amount may not exceed 1,000,000 TL.
BKY License
ARTICLE 5 – (1) Natural persons operating as BKYs must hold a BKY license to be eligible for tax incentives.
(2) To obtain a BKY license, BKYs must meet any one of the following criteria for high-income or high-net-worth investors or experienced investors:
a) High-income or high-net-worth investors;
Those whose annual gross income—defined as the total gross amount of income items listed on their annual income tax returns for the two calendar years preceding the license application—is 200,000 TL or more, or
whose total personal net worth—comprising all types of movable and immovable assets held at the time of application—
is 1,000,000 TL or more. However, the residence in which the investor resides, any loan obtained by mortgaging this residence, rights arising from insurance contracts, and amounts to be paid upon death or retirement from financial rights earned in the form of pension contributions are not taken into account in the calculation of personal wealth.
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b) Experienced investors;Individuals who have served as fund or portfolio managers at banks or financial institutions, or who have held the position of manager or an equivalent position—or a higher position—for at least two years in the small and medium-sized enterprise (SME) financing, project finance, or corporate finance units of banks and financial institutions, or in venture capital companies—including venture capital investment partnerships—in a managerial or equivalent position, or a higher-level position, for at least two years; or,
who, within the five years prior to obtaining the license, worked for at least two years as a deputy general manager or in an equivalent or higher position at a company with an annual turnover of at least 25,000,000 TL; or,
Have been a member of one of the BKY networks for at least one year prior to obtaining the license and, at the time of application, be a partner as a BKY in at least three non-publicly traded companies that meet the qualifications specified in Article 26; or,
Has at least two years of experience at domestic incubators or technology development centers established to support companies in the startup or growth phase, and has contributed at least 20,000 TL in capital to each of at least three companies in the startup or growth phase at such centers,
.
License Application
ARTICLE 6 – (1) Applications for a BKY license shall be submitted to the Undersecretariat through accredited BKY networks, accompanied by the information and documents specified in Article 7.
(2) Except for negligent offenses, even if pardoned, individuals who have been convicted of any of the following crimes—regardless of the length of the prison sentence or the nature of the penalty—including simple and aggravated embezzlement, extortion, bribery, theft, fraud, forgery, breach of trust, fraudulent bankruptcy, and abuse of office, as well as smuggling offenses, tampering with official tenders and transactions, laundering assets derived from crime, disclosing state secrets, or tax evasion—shall not have their license applications accepted, even if they meet the conditions set forth in Article 5.
Documents
Required for License Applications ARTICLE 7 – (1) BKYs applying for a license shall submit the following documents to the Undersecretariat through accredited BKY networks, depending on whether they fall under the definition of a high-income or high-net-worth investor or an experienced investor:
a) For high-income or high-net-worth investors;An application form completed by the BKY in accordance with the sample in Annex 1,
A copy of the annual tax return for the last two years, certified by the relevant tax office or a notary public, showing that the applicant’s annual gross income exceeded 200,000 TL in each of the two calendar years preceding the application date, for salaried employees, a document for the last two years signed by an authorized representative of the employer, or evidence showing that their personal net worth as of the application date is over 1,000,000 TL, based on the registered value in the land registry, the market value determined by the municipality where the property is located, or the value determined by at least two real estate/residential property appraisers licensed by the Capital Markets Board, documents regarding real estate owned by the applicant and/or documents showing ownership of Turkish and/or foreign currency and capital market instruments, as well as cash deposits denominated in Turkish and/or foreign currency, documents signed by authorized representatives of the banks or institutions where these instruments are held, and/or a copy of the Turkish Trade Registry Gazette, the partners’ share register, and the most recent balance sheet showing the monetary value of the shares held in the paid-in capital of non-publicly traded companies,
4Resume.
b) For experienced investors:The application form in Appendix 1, completed by the BKY,
along with a document signed by an authorized representative of the relevant BKY network confirming at least one year of membership in that network prior to the license application date, Copies of the Turkish Trade Registry Gazette, the shareholders’ register, and the most recent balance sheet, along with the income statements for the last two fiscal years, demonstrating ownership in at least three non-publicly traded companies that meet the qualifications specified in Article 26; or,
At least two years of work experience as a fund or portfolio manager at banks or financial institutions, or in venture capital companies (including venture capital investment partnerships), or in the small and medium-sized enterprise (SME) financing, project financing, or corporate finance units of banks and financial institutions, or in a higher position; or,
In a company with an annual turnover of at least 25,000.000 TL, demonstrating that the applicant worked for at least two years within the last five years prior to obtaining the license as a deputy general manager or in an equivalent or higher position, signed by an authorized representative of the company in question, along with income statements for the relevant years, or,
A document signed by an authorized representative of a domestic incubator center or technology development center established to support start-up or growth-stage companies, verifying at least two years of experience at such a center, a document signed by an authorized representative of the relevant center, along with an issue of the Turkish Trade Registry Gazette verifying that at least 20,000 TL in capital was contributed to each of at least three companies in the startup or growth phase at these centers, a copy of the partners’ share register and a copy of the most recent balance sheet,
Curriculum Vitae.
(2) For foreign BKYs, documents regarding the work permit obtained from the Ministry of Labor and Social Security and the residence permit obtained from the Ministry of the Interior must also be submitted.
License Term
ARTICLE 8 – (1) Licenses issued to BKYs are valid for five years, and the five-year period begins on the date the Individual Participating Investor License document, as set forth in Annex 2, is issued to the BKY by the Undersecretariat. The start date of the license’s validity period is indicated on the license certificate. At the end of the license term, BKYs may apply for license renewal through accredited BKY networks, along with the current documents listed in Article 7. The license renewal application is evaluated according to criteria to be determined by the Undersecretariat, and the term of the BKY’s license may be extended in five-year increments.
Transfer
of License ARTICLE 9 – (1) Licenses issued by the Undersecretariat may not be transferred to another party.
Retention
of License Information ARTICLE 10 – (1) The Undersecretariat shall retain a copy of BKY license documents and store information regarding the license holder in its information system. BKYs that have lost their license certificate and have reported this to the Undersecretariat will be issued a new license certificate, and the old license certificate will be revoked.
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Circumstances
Requiring License Revocation ARTICLE 11 – (1) The following circumstances require license revocation:
a) The BKY’s loss of legal capacity.
b) Determination that the licensing criteria have been lost.
c) The death of the BKY.
d) The use of capital contributed by the BKY to the startup company in a manner contrary to the purpose specified in the business plan.
e) The intentional provision of false information or documents to the Undersecretariat, or engaging in acts intended to deceive the Undersecretariat.
e) Failure to comply with the sectoral restrictions in Article 13, the investment limitations in Article 14, or the partnership share and ratio specified in Article 18.
(2) If it is determined that the circumstances set forth in subparagraphs (ç) and (e) of the first paragraph have occurred, or if an act contrary to other provisions of this Regulation has taken place, the Undersecretariat shall first issue a warning to the BKY and the startup company. If the non-compliance is not remedied within the period granted—which must be no less than one month and no more than three months—despite the warning, or if it is not possible to remedy the non-compliance, the Undersecretariat may revoke the BKY license.
(3) In the event that the circumstances set forth in subparagraphs (c), (d), and (e) of the first paragraph occur, the Revenue Administration shall be notified in writing by the Undersecretariat within two months so that the tax support provided for the investments in question may be recovered.
(4) A BKY whose license has been revoked may not apply for a new license for a period of two years from the date of revocation; applications for a new license submitted before the expiration of this two-year period shall not be accepted. Revoked license certificates must be returned to the Undersecretariat by the BKY within one month of the revocation date at the latest.
Confidentiality
of BKY Identity ARTICLE 12 – (1) Subject to the circumstances specified in the relevant laws by judicial and administrative authorities, the identity information of a licensed BKY shall be kept confidential by the Undersecretariat.
PART
THREE: Matters
Governing BKY Investments Investment Limits and Scope
of Activities ARTICLE 13 – (1) Except for joint investments specified in Section Four, BKYs may receive state support for investments made individually in up to twenty different corporations during the five-year validity period of their licenses. State support is not provided for investments exceeding this limit. BKS investments in sectors or activities not included in the list of sectors eligible for state support in Annex 4 are not eligible for state support. In the event of a violation of this article, the provisions of the second and third paragraphs of Article 11 shall apply.
Minimum and Maximum Investment Amounts
ARTICLE 14 – (1) For the capital contributed by a BKY to a startup company to be eligible for the tax deduction, the value of the company shares acquired by the BKY in each startup company must not be less than 20,000 TL and
must not exceed 1,000,000 TL over a
6-year period. However, the total of investments made by a BKY in different startup companies may exceed this amount.
(2) In joint investments made by BKYs, subject to notification to the Undersecretariat in accordance with the principles set forth in Section 4, the maximum amount of capital to be contributed for each startup company on an annual basis shall be 2,000,000 TL. If the conditions for a joint investment are not met, the total capital invested by BKYs in each startup company may not exceed 1,000,000 TL annually.
Application
to the Undersecretariat ARTICLE 15 – (1) In order for their investments in startup companies to benefit from tax incentives, BKYs must submit an application to the Undersecretariat prior to making the investment, accompanied by the documents specified in Article 21. These applications are submitted on behalf of the BKY by the BKY network of which it is a member. Applications will be returned if they violate BKS regulations. If there are issues that need to be corrected, a request for correction, along with the reasons, is communicated to the BKY network.
Business Plan
ARTICLE 16 – (1) In order for the capital contributed by BKYs to a startup to qualify for tax incentives, the BKY must submit to the Undersecretariat a business plan agreed upon with the startup or the entrepreneur. Business plans, which outline the purpose and timeframe for the use of the capital invested by BKYs in startup companies, must be prepared in accordance with the template in Annex 3. The business plan serves as a declaration of the BKY’s investment plan. The business plan is used by the Undersecretariat to monitor the stages of the investment’s implementation. If any changes are made to the business plan submitted to the Undersecretariat, the updated business plan must be submitted to the Undersecretariat within one month of the date the change was made.
Articles of Association
ARTICLE 17 – (1) The BKY and the entrepreneurs shall draft the articles of association in accordance with their own needs and priorities. The draft articles of association shall be submitted to the Undersecretariat under Article 21 before the final version is finalized. The Undersecretariat shall verify whether the provisions of the Articles of Association contain any provisions contrary to BKS legislation.
(2) The entrepreneur and the BKY may enter into one or more agreements outside the Articles of Association to secure their mutual rights and obligations. However, such agreements may not conflict with the provisions of the Articles of Association.
(3) BKYs may not require the entrepreneur to sign a document creating a debt obligation in exchange for the capital they invest in startup companies, nor may they accept collateral such as mortgages or pledges, nor may they demand assignment or dividend guarantees. If such a violation is detected, the BKS investment is excluded from the scope of support, and the BKY license may be revoked. If any support has been provided, the Revenue Administration is notified so that it may be recovered in accordance with Article 82 of the Income Tax Law.
Minimum and Maximum Partnership Shares
ARTICLE 18 – (1) BKYs or BKY partnerships may not be the controlling partner in a startup company; they may not control the startup company, either directly or indirectly, alone or jointly. Venture capital funds, either individually or collectively, or together with their spouse, their lineal descendants and ascendants, and collateral relatives up to and including the third degree, as well as in-laws, may not, directly or indirectly, hold more than 50%or more of the total voting rights represented by such shares, nor may they appoint more than 50% of the members of the board of directors. BKYs may hold preferred shares that grant the right to representation on the startup’s board of directors. Subject to the provisions of this article, the BKY and the entrepreneur may freely determine the scope of privileges granting the BKY a veto right in the management of the startup company regarding matters of significance, as well as the scope
of restrictions
that may be imposed on the entrepreneur. In the event of a violation of this article, the provisions of the second and third paragraphs of Article 11 shall apply.
Participation
of BKYs in the Management of the Start-up Company ARTICLE 19 – (1) The participation of BKYs in the management of the start-up company is limited to participation in the official governing body. This participation takes place through the general meeting, the board of directors, or an advisory board or committee. A BKY may not assume any administrative role in the startup other than on the board of directors, nor may it work as company personnel. A BKY may not receive any form of compensation or salary from the startup. If a violation of this article is detected, the provisions of the second paragraph of Article 11 shall apply.
Disclosure
of Confidential Information ARTICLE 20 – (1) BKYs and BKY partnerships may not disclose or use information constituting trade secrets for the entrepreneur without the entrepreneur’s written consent. The entrepreneur may request that the BKY sign an agreement aimed at protecting their trade secrets. If a violation of this article is detected, the provisions of the second paragraph of Article 11 shall apply.
Documents
Required for Application ARTICLE 21 – (1) A BKY seeking to benefit from state support for a BKS investment shall, prior to making the investment, submit the following documents to the Undersecretariat and apply for the investment through the accredited BKY network:
a) Business plan.
b) A draft articles of association, prepared in accordance with the Turkish Commercial Code, detailing the startup’s scope of operations, partnership structure, registered and paid-in capital, current partners, and other relevant matters.
c) Identification information and resumes of the startup’s partners.
ç) A letter of commitment stating that the BKY has no familial ties with the entrepreneurs with whom it has established a partnership that could constitute a violation of Article 82 of the Income Tax Law, and that it has no commercial relationship with the startup company.
d) A letter of commitment stating that the startup’s partners will comply with the regulations under Article 5 of the Annex to the Law.
e) A document certifying the status, issued by the relevant authority, confirming that a 100% tax incentive is available when investing in a startup whose project has been supported within the past five years under research, development, and innovation programs established by the Ministry of Science, Industry and Technology, the Scientific and Technological Research Council of Turkey, and the Small and Medium-Sized Enterprises Development and Support Administration, in order to benefit from a 100% tax incentive.
(2) The Undersecretariat shall verify whether the business plan and the company’s articles of association are in compliance with Article 5 of the Annex to the Law, Transitional Article 82 of the Income Tax Law, and this Regulation. Apart from this matter, the Undersecretariat bears no responsibility regarding the business plan or the company’s articles of association.
Establishment
of a Startup Company ARTICLE 22 – (1) For startup companies to be established by BKYs in partnership with entrepreneurs, the company’s incorporation is finalized upon the publication of the company’s articles of association in the Turkish Commercial Register Gazette, following their finalization in accordance with the provisions set forth in this Regulation. The establishment of a partnership with an existing company is effected by making the necessary amendments to the company’s articles of association in accordance with the provisions of this Regulation to indicate that the BKY is a partner in the company, and by publishing these amendments in the Turkish Trade
Registry
Gazette. In both cases, the partnership structure is recorded in the company’s share register, and all information and documents are submitted to the Undersecretariat. If the documents are not submitted to the Undersecretariat within the timeframe specified in Article 23 without a valid reason, the application is canceled. If the necessary information and documents are completed after the cancellation, the application may be renewed.
(2) To ensure the strengthening of the company’s capital structure—whether through a capital commitment in a newly established company or through capital increases in an existing company—the acquisition costs of the capital or shares, including the issuance premium, must be deposited in cash into the startup company’s bank account. The amounts paid for the acquisition of shares deposited in cash into the startup’s account must be spent or converted into physical investments in accordance with the business plan within twelve months at the latest from the date of deposit into the account.
Finalization
of Applications ARTICLE 23 – (1) Within three months following the receipt by the Undersecretariat of the documents specified in Article 21 and the Undersecretariat’s approval of the application, a copy of the Turkey Trade Registry Gazette containing the startup company’s registered articles of association and a bank statement signed by a bank official confirming that the acquisition price amount specified in the business plan has been transferred to the company’s name, must be submitted to the Undersecretariat through accredited BKY networks. The Undersecretariat shall, shall, following the fulfillment of the conditions specified in this article, notify the relevant tax office within one month so that the BKY may benefit from the tax incentive.
Amendment
to the startup company’s articles of association ARTICLE 24 – (1) If there is a discrepancy between the draft text of the company’s articles of association prepared in accordance with Article 339 of the Turkish Commercial Code and submitted at the time of application and the text of the articles of association published in the Turkish Trade Registry Gazette, the BKY must explain the reason for this discrepancy to the Undersecretariat in writing. The Undersecretariat shall review these amendments to determine whether they are in violation of the relevant laws and the provisions of this Regulation. If any non-compliance is found, the Undersecretariat shall request that the investor make the necessary corrections.
(2) In the event that amendments are made to the company’s articles of association within a two-year period following the provision of tax support, the Undersecretariat shall be notified within one month at the latest from the date the amendment was made.
Opening
a Joint Bank Account ARTICLE 25 – (1) The proceeds from the acquisition of startup company shares by the BKY shall be held exclusively in a commercial bank account opened for this purpose. This bank account is managed by the startup company but requires joint signatures for expenditures exceeding a specific amount to be determined by the BKY. This account must be used exclusively to finance the activities specified by the startup company in its business plan.
(2) In documenting all payments and transfers made from this account, the documents accepted under the Tax Procedure Law shall be taken into consideration. Monthly statements for these bank accounts are retained by the startup company and presented to the Revenue Administration and the Undersecretariat upon request. If a violation of this article is detected, the provisions of the second paragraph of Article 11 shall apply.
Nature
of the Company to Be Invested In ARTICLE 26 – (1) In order for BKYs to benefit from state support, the company in which they invest capital must be a joint-stock company subject to the Turkish Commercial Code. For BKYs to be eligible for state support, the company in which they have acquired shares must meet the following conditions:
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a) The company’s net sales for each of the last two fiscal years prior to the BKY’s investment must not exceed 5,000,000 TL annually.
b) The company must have no more than fifty employees.
c) The company must not be directly or indirectly affiliated with or under the influence of the BKY, the BKY’s spouse, the BKY’s or spouse’s lineal descendants and ascendants, or collateral relatives up to the third degree, including by marriage, in terms of management, control, or capital.
ç) It must not be under the control of another company.
d) It must operate in sectors or engage in activities listed in Annex 4, which are designated by the Undersecretariat as eligible for state support.
e) Its shares must not have been publicly offered.
Prohibition
on Investing in Illegal Activities ARTICLE 27 – (1) Venture companies may not engage in activities conducted with income derived from illegal or suspicious sources, or in activities contrary to public morality. Such activities include deriving revenue from financial smuggling, arms trafficking, proceeds obtained through illegal means, human trafficking, organized crime, corruption, and other criminal activities, as well as activities contrary to public morality. In the event of a violation of this article, the provisions of the second and third paragraphs of Article 11 shall apply.
SECTION
FOUR BKY Joint Investments
Type
of Partnership ARTICLE 28 – (1) Where at least two licensed BKYs jointly invest in a startup company, such investments are referred to as BKY joint investments. All such partners are subject to the provisions of the Turkish Commercial Code applicable to shareholders of joint-stock companies.
Lead Partner
in Joint Investments ARTICLE 29 – (1) In joint investments made by BKYs, the BKYs shall designate one person from among themselves as the lead partner. The lead partner submits the business plan to the Undersecretariat on behalf of the partnership through the BKY network and forwards the information and documents requested by the Undersecretariat to the Undersecretariat.
Limit
on Joint Investments ARTICLE 30 – (1) BKYs may receive state support for joint investments made in up to twenty different joint-stock companies during the five-year validity period of their licenses, excluding their individual participation investments. State support is not provided for investments exceeding this limit. BKYs participating in joint investments may serve as lead partners in no more than five investments at the same time. In BKY joint investments, the maximum investment amount per startup company is set at 2,000,000 TL on an annual basis. The minimum investment amount specified in Article 14 applies to each BKY participating in a joint investment.
Selection
of the Lead Partner ARTICLE 31 – (1) BKYs may freely designate the lead partner among themselves. Venture capital firms shall jointly notify the Undersecretariat of their joint investment decisions and the lead partner through the venture capital network. Investments made without this written declaration are subject to the individual investment limits imposed on BKYs.
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SECTION
FIVE BKY Networks
Accreditation
of BKY Networks ARTICLE 32 – (1) The Undersecretariat may accredit BKY networks if they meet the accreditation criteria set forth in Article 34 and may cooperate with these accredited networks for the purpose of monitoring and auditing BKY activities. No cooperation regarding monitoring and auditing is conducted with non-accredited BKY networks.
Accreditation Application
ARTICLE 33 – (1) Applications for accreditation shall be submitted to the Undersecretariat along with information and documents substantiating the criteria specified in Article 34.
Accreditation Criteria
ARTICLE 34 – (1) For BKY networks to be accredited by the Undersecretariat, they must meet the following conditions:
a) The BKY network must have a physical space equipped with sufficient facilities—the details of which shall be specified in a protocol—to facilitate meetings between BKYs and entrepreneurs.
b) The BKY network must employ at least one person with a university bachelor’s degree to conduct the preliminary screening of entrepreneur proposals.
c) The BKY network must have at least five licensed BKYs as members, and these BKYs must collectively hold equity stakes in at least five startup companies that meet the qualifications specified in Article 26.
ç) The BKY network must have a functional website and database.
d) The network must have signed the protocol prepared by the Undersecretariat.
Duration
of Accreditation ARTICLE 35 – (1) The accreditation granted by the Undersecretariat is valid for five years. If the BKY network submits a re-accreditation application at the end of the fifth year, the Undersecretariat shall verify whether the accreditation criteria have been met; if compliance is established, the Undersecretariat may extend the accreditation for five-year periods.
Rights
Granted to Networks Under Accreditation ARTICLE 36 – (1) In order for BKYs’ investments to benefit from state support, BKYs must submit their applications through accredited networks. A BKY may be a member of more than one BKY network.
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Obligations
of Accredited BKY Networks ARTICLE 37 – (1) Limited to the monitoring and supervision of BKYS, BKY networks shall:
a) Prepare reports requested by the Undersecretariat to monitor compliance with the business plans submitted to the Undersecretariat by BKYs that are members of their networks, and submit these reports to the Undersecretariat on a semi-annual basis,
b) Report any irregularities concerning their members in the format specified by the Undersecretariat;
c) Provide statistical information requested by the Undersecretariat in a timely manner.
Accreditation Protocol
ARTICLE 38 – (1) The Undersecretariat shall sign a protocol with the BKY networks, prepared in accordance with the provisions of the BKS legislation and specifying the mutual duties and obligations of the parties. If the Undersecretariat identifies actions contrary to this protocol, the protocol may be terminated and accreditation revoked depending on the severity of the actions.
Revocation
of Accreditation ARTICLE 39 – (1) The circumstances under which accreditation may be revoked and the corresponding sanctions are predetermined in the accreditation protocol. If, during oversight and inspection activities conducted under Articles 45 and 46, a violation of BKS regulations or protocols is detected, the Undersecretariat shall request that the violation be rectified. If the request for correction is not fulfilled within the specified timeframe—which shall be no less than one month and no more than three months, depending on the nature of the violation—the accreditation may be revoked.
Procedures
Following Revocation of Accreditation ARTICLE 40 – (1) Investments made using BKY networks up to the date of accreditation revocation are eligible for tax incentives. However, the requests of BKYs that have applied to the Undersecretariat through the network but were unable to complete the application process due to the revocation of the network’s accreditation shall be fulfilled by the Undersecretariat. Investments made by BKYs that are members of the network after the revocation of accreditation shall not be eligible for tax incentives.
SECTION
SIX Reporting and Notification
Activity Reports
ARTICLE 41 – (1) For a period of two years starting from the date the BKY becomes a partner in the startup company and deposits the cash capital into the partnership bank account, the startup company shall, is required to submit to the Undersecretariat, on a semi-annual basis, an activity report prepared in accordance with the template in Annex 5, indicating the stage of progress relative to the business plan, as well as the investments made and activities conducted, along with the partnership bank account statements. Following the expiration of the two-year period beginning with the acquisition of the shares, only the activity reports shall be submitted by the BKY to the Undersecretariat once a year for informational purposes until the sale of all shares in the startup company. Any additional capital contribution to a portfolio company restarts the two-year period. BKYs exiting a portfolio company through the sale of shares must submit a sales report prepared in accordance with the example in Annex 6 to the Undersecretariat within one month of the sale at the latest. In the event of a violation of this article, the provisions of the second paragraph of Article 11 shall apply.
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Preparation
of Financial Statements ARTICLE 42 – (1) Financial statements refer to the statements required to be prepared in accordance with Turkish Accounting Standards. If the startup company is not subject to the obligation to apply the Turkish Accounting Standards established by the Public Oversight, Accounting, and Auditing Standards Authority, the financial statements shall be prepared in accordance with the regulations of the Ministry of Finance. The Undersecretariat is authorized to request financial statements from startup companies when it deems necessary.
Reporting
of Special Circumstances ARTICLE 43 – (1) Changes to the articles of association following registration, as well as significant events such as bankruptcy, must be reported by the BKYs to the Undersecretariat within one month at the latest from the occurrence of the event; reports regarding tax audits must be reported within one month at the latest from the date of notification to the taxpayer. In the event of the startup’s bankruptcy prior to the sale of all its shares by the BKY, the BKYs must submit a bankruptcy report prepared in accordance with the template in Annex 7 to the Undersecretariat within one month at the latest from the commencement of the bankruptcy proceedings. If a violation of this article is detected, the provisions of the second paragraph of Article 11 shall apply.
Preparation
of Statistical Information ARTICLE 44 – (1) The Undersecretariat may request statistical information from startup companies and accredited BKY networks. The Undersecretariat may publish the statistical information it obtains regarding the BKS system in aggregated form on a semi-annual or annual basis.
SECTION
VII Supervision and Inspection
Supervisory Activities
ARTICLE 45 – (1) Supervision activities encompass the ongoing control measures to be carried out by the Undersecretariat over BKYs, accredited BKY networks, Venture Capital Partnerships, and startup companies to ensure compliance with the provisions set forth in their business plans, partnership interests, and the partnerships in which they intend to invest.
Audit Activities, Audit Authority, and Reporting
ARTICLE 46 – (1) The Board is authorized to audit BKYs, BKY partnerships, accredited BKY networks, and startup companies on behalf of the Undersecretariat.
(2) Audit activities include audits conducted by the Board based on a sample determined through risk assessments in areas defined by the Undersecretariat, covering BKYs, BKY partnerships, accredited BKY networks, and startup companies listed in the BKS system.
(3) The Board conducts its audits within the framework of an annual plan. BKYs, BKY partnerships, accredited BKY networks, and startup companies are obligated to provide all information and documents requested by the Undersecretariat and the Board, either with wet signatures and/or electronically, in the required format and in a timely manner. The Board prepares its audit reports in accordance with international auditing standards.
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EIGHTH SECTION
Miscellaneous and Final Provisions
Time Limits and Service
of Process ARTICLE 47 – (1) Unless otherwise specified, the starting point for the time periods referred to in this Regulation shall be the date the document is dispatched from the Undersecretariat or the date the document is received by the Undersecretariat. All applications submitted to the Undersecretariat shall be responded to in writing and electronically, or solely electronically, within one month at the latest. Notifications to BKYs, accredited BKY networks, entrepreneurs, and startup companies may be made in writing and electronically or solely electronically.
Information System
ARTICLE 48 – (1) The information and documents requested by the Undersecretariat for the processing of applications submitted to the Undersecretariat shall be entered into the Undersecretariat’s information system electronically by the BKY network or the BKY; activity reports shall also be entered electronically into the Undersecretariat’s information system by startup companies. The originals of the documents, or copies thereof if accepted by the Undersecretariat, shall also be sent to the Undersecretariat.
Implementation
of Accredited BKY Networks TRANSITIONAL ARTICLE 1 – (1) Until December 31, 2013, applications to the Undersecretariat for a BKY license, tax incentives related to BKS investments, and notifications regarding BKY partnerships shall be submitted directly to the Undersecretariat by the BKYs.
Entry
into Force ARTICLE 49 – (1) This Regulation enters into force on the date of its publication.
Enforcement
ARTICLE 50 – (1) The provisions of this Regulation shall be enforced by the Minister to whom the Undersecretariat of the Treasury is subordinate.