# Establishing a Venture Capital Investment Fund (VCIF) in Turkey

# Guide to Establishing a Venture Capital Investment Fund (VCIF) in Turkey

Venture Capital Investment Funds (VCIF, or *Girişim Sermayesi Yatırım Fonu - GSYF* in Turkish) are long-term investment vehicles that channel the funds of qualified investors into high-growth-potential startup and scale-up companies. Legally structured as asset pools with no separate legal personality, these funds are regulated by the *Capital Markets Board of Turkey (CMB)* – known in Turkish as **Sermaye Piyasası Kurulu (SPK)** – and can **only be established by licensed portfolio management companies** authorized by the CMB. Individuals or non-licensed companies cannot directly set up a VCIF. VCIFs are closed-end private funds catering exclusively to a limited number of qualified investors, and they are typically established with a fixed term (usually **5–10 years**). The fund’s duration must be explicitly stated in its offering documentation. This guide outlines the step-by-step process and regulatory requirements for establishing a VCIF in Turkey, based on CMB regulations.

## Preconditions and Preparation

**Portfolio Management Company (PMC) License:** To establish a VCIF, one must either have a portfolio management company licensed by the CMB or partner with such a company. According to CMB regulations, portfolio management companies are required to have a minimum paid-in capital of **TRY 50 million** for the year 2024. The PMC must be structured as a joint-stock company (A.Ş.) with all shares registered (name-based) and fully paid in cash. Additionally, founding shareholders are subject to fit-and-proper criteria (no bankruptcy history, no prohibitive criminal convictions, sufficient financial strength and good repute, etc.).

**Expertise and Experience:** The founding portfolio management company’s board of directors must include at least one member with a minimum of **5 years of experience** in venture capital investments. Moreover, the PMC is required to form an **investment committee** for the fund, and this committee must include the aforementioned experienced board member. If the fund’s portfolio management will be outsourced to another licensed manager (instead of being managed by the founding PMC internally), then the same organizational requirements (experienced personnel and investment committee) must be met at that external manager.

**Establishing a Fund Without Owning a PMC:** If an entrepreneur or entity wishes to sponsor a venture capital fund but does not own a licensed PMC, it is common to partner with an existing licensed PMC. This structure is often referred to as a “**white labeling**” model. In such cases, the licensed PMC serves as the official founder and manager of the fund, while the venture team (sponsor) gains influence over the fund’s investment strategy and decisions through **privileged participation units** (special share classes) that confer representation on the investment committee or other rights. The PMC and the venture sponsor typically sign agreements (MOUs or protocols) outlining each party’s responsibilities, management fees, and profit-sharing, after which the PMC initiates the formal fund application to the CMB. This model is recognized by the CMB and is frequently used in practice.

## Step 1: Required Documents for Application

For the VCIF establishment application to the CMB, a comprehensive set of documents must be prepared:

* **Application Petition (Cover Letter):** An official letter addressed to the CMB, requesting approval for establishing the fund.
    
* **Establishment Application Form:** A standard form (template provided by the CMB) that captures information about the fund and the founder. This form’s annex will list various required information and documents that must accompany the application.
    
* **Fund Internal Regulation (İçtüzük):** This is the charter or bylaws of the fund, detailing the fund’s establishment and operating principles. Since VCIFs in Turkey are often set up under an **umbrella fund structure**, the application typically involves preparing a standard umbrella fund internal regulation and a fund-specific internal regulation, using CMB’s provided templates. The internal regulation covers the fund’s name, purpose, governance, the rights of participation unit holders, profit distribution rules, the fund’s term, termination procedures, etc. It must be signed by the founding PMC and the chosen custodian (portfolio depository) institution.
    
* **Issuance Document (İhraç Belgesi):** The offering document for the fund’s participation units, subject to CMB approval. It serves a similar purpose to a prospectus and is provided to potential qualified investors. The issuance document contains details on the fund’s investment strategy, target fund size, minimum investment amount per investor, management fee, performance fee (carry), risk factors, and other terms of the offering.
    
* **Board Resolution of the Founder:** A certified copy of the PMC’s Board of Directors resolution approving the establishment of the fund and the issuance of fund units. This should be notarized and evidences that the PMC’s authorized governing body has sanctioned the new fund launch.
    
* **Custody Agreement:** An agreement with the **portfolio custodian** selected for the fund (e.g., Takasbank or another licensed custodian bank). This document may need to be provided at application or at least the details of the chosen custodian should be communicated to the CMB. The custodian will be responsible for safekeeping the fund’s assets. The internal regulation typically names the custodian.
    
* **Independent Auditor Engagement:** Information or a letter indicating the appointment of an independent audit firm that will audit the fund’s financial statements. Under CMB rules, investment funds must have annual financial statements audited. The auditor selection is generally done at inception and communicated to the CMB.
    
* **Other Supporting Documents:** These may include up-to-date operating licenses of the PMC, trade registry excerpts, signature circulars, information on fund service providers (such as valuation experts or advisors, if any), and explanations of the fund’s fee structure (management and performance fees). The CMB’s application form and related regulations outline the full list of required attachments in detail. Essentially, any document that substantiates the fund’s compliance with regulations and the sponsor’s qualifications should be included.
    

**Note:** If the applying PMC is establishing its first VCIF, typically an umbrella fund structure will be created. In practice, the CMB may first approve the umbrella fund’s internal regulation and then approve the first sub-fund’s issuance under that umbrella. However, it is possible to apply for both umbrella establishment and fund issuance concurrently. For PMCs that have experience and already have an umbrella fund set up, subsequent fund applications can often be processed simultaneously for internal regulation and issuance approval.

## Step 2: CMB Application and Approval Process

Once all documents are prepared, the complete application is submitted to the CMB. Applications are typically made through the CMB’s **electronic application system**, with physical copies of certain documents provided as necessary. The CMB will review the application file and may request additional information or documentation if required. During this review, the CMB checks that the fund’s internal regulation and issuance document comply with all relevant regulations (for example, investment limits, fund term, qualified investor criteria, fee limits, etc., as set out in the Communiqué).

**CMB Approval:** Upon satisfactory review, the CMB approves the fund’s internal regulation and issuance document. The CMB’s approval legally establishes the fund. The approval is often announced via the CMB’s weekly bulletin or communicated in writing to the applicant.

**Registration (Tescil):** After CMB approval of the internal regulation, the fund must be **registered in the Trade Registry** despite not having legal personality. As required by regulations, the internal regulation is registered and published in the Turkish Trade Registry Gazette (this serves to officially record the fund’s formation). The approved internal regulation and issuance document are also disclosed on the Public Disclosure Platform (KAP) or the founder’s website to inform investors and the market.

The timeline for obtaining CMB approval can vary depending on the completeness of the application and the CMB’s workload. In practice, a well-prepared application might receive approval in roughly **4–8 weeks**. The CMB usually provides initial feedback within about 10 business days of filing (indicating any deficiencies to be addressed). Once all requirements are met, the Board grants the **fund establishment and unit issuance permission**, enabling the process to move forward.

## Step 3: Registration with MKK and Takasbank (Operational Setup)

Following CMB approval, certain operational registrations and account setups must be completed with the capital markets infrastructure institutions before the fund can begin operations:

* **Central Registry Agency (MKK) Registration:** The fund’s participation units must be held in book-entry form through MKK, Turkey’s central securities depository. No physical certificates are issued; instead, each investor’s fund units are tracked electronically in their MKK accounts. Therefore, after the fund is approved, the founder coordinates with MKK to create the fund’s profile on the system and to obtain an **ISIN or fund code** for the participation units. MKK will facilitate the dematerialization (electronic issuance) of the fund units and record ownership. It will also handle transfers or any pledges of fund units. The fund (through the founder) will need to pay registration and service fees to MKK for these services (such fees are typically outlined in the fund’s issuance document under “MKK fees”).
    
* **Opening Custody Accounts with the Depository:** Every VCIF must appoint an authorized **custodian (portfolio depository)** for safekeeping of its assets, according to CMB regulations. Usually *Takasbank* (Istanbul Settlement and Custody Bank) serves as the custodian for funds, although other licensed custodian banks may also be used. After CMB approval, the founder PMC finalizes the custody agreement with the chosen depository (if not already done during application), and custody accounts in the fund’s name are opened. The fund’s cash, the shares it acquires in startups, and other portfolio assets will be held in these accounts by the custodian. The custodian monitors the fund’s asset movements and transactions to ensure they are compliant with regulations; for instance, before a venture investment is executed, information and documents regarding the transaction must be provided to the custodian a reasonable time in advance to allow oversight.
    
* **TEFAS Registration:** A CMB-approved VCIF is registered on the *Turkey Electronic Fund Distribution Platform (TEFAS)*. TEFAS is a platform operated by Takasbank that enables distribution of funds across different selling institutions in Turkey. Registering the VCIF on TEFAS means the fund’s basic details are entered into the system, and if necessary, transactions involving the fund (purchases or transfers by qualified investors through banks/brokers) can be facilitated via TEFAS. It’s important to note that because a VCIF can only be sold to qualified investors and not to the general public, it will not be openly marketed on TEFAS to retail clients. Typically, qualified investors will subscribe to the fund by contacting the portfolio management company directly or through private banking channels, rather than through an open TEFAS order. The TEFAS listing primarily ensures the fund is recognized across the financial system for custody and settlement purposes, and it may allow participating brokerage firms or banks to process fund unit transactions for their clients when eligible
    
* **Other Operational Preparations:** The fund must engage an independent audit firm and enter into an annual auditing arrangement (if not already appointed earlier). Additionally, necessary notifications on KAP are set up (the fund will have its own section or code on the KAP system for disclosures). The founder PMC should also set up internal systems for **fund accounting, valuation, and reporting**, or outsource these functions as needed. For example, the fund’s portfolio valuations might be supported by an external appraisal firm for difficult-to-value investments, and any such external service engagements must align with what is disclosed in the issuance document (any expense not listed in the issuance document would typically not be charged to the fund without informing investors).
    

With these steps completed, the fund becomes operationally ready to collect capital from investors and commence investment activities.

## Step 4: Investor Participation and Fundraising Phase

After the fund’s setup is finalized, the VCIF enters the capital raising phase from its intended investor base. VCIF units can only be sold to **qualified investors**. Under CMB rules, a qualified investor is defined as an individual or entity that meets certain wealth criteria – for individuals, having at least TRY 1 million in financial assets; for legal entities, at least TRY 1 million in total assets or annual revenue – as well as institutional investors such as banks, brokerage firms, insurance companies, portfolio management firms, etc., which are considered qualified by default. Before investing, these investors must provide a written declaration (and evidence) confirming their qualified investor status and sign an **investment commitment agreement** (a subscription agreement) for the fund.

**Capital Commitments and Minimum Fund Size:** VCIFs typically raise capital through investor **commitments** rather than upfront cash subscriptions. This means each investor agrees to commit a certain amount of capital to the fund, which can be drawn down over time. CMB regulations mandate that a VCIF must have a minimum total commitment of **TRY 50 million** from qualified investors in order to proceed. This minimum fund size is stated in the issuance document and acts as a threshold for viability. The founder must ensure that within **1 year** from the start of the fund’s offering period (the date fund units are first made available to investors), the total committed capital reaches at least TRY 50 million. If the fund fails to secure commitments of this amount within one year, the fund is not allowed to continue operations and must be unwound – in other words, it cannot proceed to invest with a smaller size. In such a case, the founder is required to cease investment activities and, within six months, apply to the CMB for permission to liquidate the fund, then deregister the fund’s internal regulation from the trade registry (effectively terminating the fund). This rule is intended to protect investors by ensuring the fund has a sufficient scale. The CMB may adjust the TRY 50 million threshold over time, typically to account for economic or inflation changes.

**Subscription Agreements and Capital Calls:** Qualified investors enter into a subscription (commitment) agreement with the fund, agreeing to contribute a certain total amount (their commitment) over the life of the fund. The fund manager will draw down these commitments via **capital calls** as the fund needs cash for investments. For example, after all interested investors have signed the subscription agreements, the fund manager will issue an initial **capital call**, requiring each investor to pay in a specified percentage of their commitment to initiate the fund’s first closing. Upon a capital call, investors must transfer the requested amount by the due date, and in return they receive fund participation units credited to their accounts via MKK (units are allocated in proportion to the amount paid, based on the unit value at that time). Each time a capital call is made, the fund’s unit price is calculated (reflecting any investments or appreciation up to that point) so that new units can be issued at the current NAV. The process for pricing and unit issuance for capital calls is described in the Communiqué; essentially, a **valuation report** is prepared to determine the unit price when new capital is drawn, ensuring parity between new and existing investors.

During the fund’s defined **investment period** (often the first **2-3 years** of the fund’s term, as stated in the issuance document), the management will typically make several capital calls to gradually draw down the committed capital and invest it in portfolio companies. By regulation, the entire committed capital must be collected within at most **one year** of the first unit sale, and once collected, the capital should be deployed into investments within the timeframe specified in the issuance document, not exceeding **2 years**. This ensures the fund is actively investing rather than sitting on idle cash.

**Making Investments:** In line with the strategy laid out in its internal regulation, the fund will invest in startups, growth-stage companies, tech ventures, or incubator projects as applicable. Each investment is vetted and decided upon by the fund’s investment committee within the PMC. The fund aims to generate returns over the **medium to long term** by eventually **exiting** these venture investments. Possible exit routes include selling the stake to another investor, taking the company public (IPO), selling the company to a strategic buyer (merger/acquisition), or, if the venture fails to meet expectations, writing off or liquidating the investment at a loss.

**Investor Rights:** Since all investors in a VCIF are qualified investors, their rights and information access are governed by the fund’s internal regulation and issuance document. The fund is managed by the Board of the founder PMC (which acts in the interest of unit holders and is subject to fiduciary duties). Some funds may issue multiple **classes of units**; for example, an “Class A” unit may be given to a sponsor or lead investor with certain privileges such as a seat on the investment committee or a preferential share of profits (carry). All such structures must be described in the issuance document and internal regulation so that investors are fully aware of any differences in rights.

**Performance Fee (Carry):** VCIF structures commonly include compensation to the fund sponsor/manager via a performance fee or **carried interest** – essentially a share of the fund’s profits upon successful exits. A typical arrangement might be that the manager is entitled to **20% of the profits** after investors have received back their contributed capital and a hurdle rate (preferred return) is achieved. The specifics of the performance fee (e.g., percentage, hurdle rate, catch-up provisions) are clearly stated in the investor agreements and the issuance document. The CMB monitors the accrual and payment of performance fees through the fund’s financial statements; each year, the calculation of any performance fee and its payment must be checked and approved by the founder’s board, and any discrepancies must be corrected. Performance fee payments and any potential clawbacks are also typically disclosed to investors.

**Note:** By design, investors generally cannot freely redeem or withdraw from a VCIF during the fund’s term (unlike open-end mutual funds). The fund is closed-end, meaning unit holders are expected to stay invested until the fund liquidates. However, certain funds may offer limited **liquidity windows** or **withdrawal rights** under specific conditions once the investment period is over. For instance, a fund might allow an investor exit opportunity if the fund’s strategy changes or at a set interval. If any such redemption/exit rights exist, they must be detailed in the issuance document and internal regulation, and executed in a fair manner for all investors.

## Step 5: Fund Internal Structure and Governance

The internal structure and governance of a VCIF are dictated by regulations and the fund’s constitutive documents:

* **Legal Personality and Representation:** The fund itself has no legal personality; it is a segregated asset pool. However, when the fund needs to act in legal transactions (for example, to be recorded as a shareholder of a portfolio company), Turkish regulation provides a mechanism to treat the fund as having a sort of “legal personality” limited to official registrations. Specifically, for actions such as registering the fund as a shareholder in a company’s share ledger or the trade registry, the fund is **represented jointly by the founder and the custodian** as its authorized signatories. In practice, this means any contracts or official documents (e.g., subscription agreements to a new company’s capital increase, or exercising shareholder rights in general assemblies) are signed on behalf of the fund by a representative of the PMC and a representative of the custodian, acting together[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=kurulu%C5%9F%2C%20sermaye%20art%C4%B1r%C4%B1m%C4%B1%20veya%20pay,kurulunca%20yetkilendirilecek%20en%20az%20ikinci). Aside from such cases, the **management board of the founder** represents the fund in all activities, and it may delegate certain authorities (such as day-to-day portfolio management decisions) to the investment committee or fund managers, while retaining ultimate responsibility[aa.com.tr](https://www.aa.com.tr/tr/ekonomi/spkdan-girisim-sermayesi-yatirim-fonlarina-iliskin-duzenleme/2001214#:~:text=gidildi)[aa.com.tr](https://www.aa.com.tr/tr/ekonomi/spkdan-girisim-sermayesi-yatirim-fonlarina-iliskin-duzenleme/2001214#:~:text=birinci%20derece%20imza%20yetkisine%20sahip,kurulu%20karar%C4%B1%20ile%20yap%C4%B1lmas%C4%B1%20zorunludur).
    
* **Founder and Manager:** The **founder** of the fund is the portfolio management company, which is responsible for establishing the fund, managing its operations, and ensuring compliance with all rules. The founder manages the fund’s assets in trust for the investors, in accordance with the fund’s defined strategy and fiduciary principles[erdem-erdem.av.tr](https://www.erdem-erdem.av.tr/bilgi-bankasi/girisim-sermayesi-yatirim-fonlari-ve-girisim-yatirimlari#:~:text=ki%C5%9Fili%C4%9Fi%20bulunmaz,inan%C3%A7l%C4%B1%20m%C3%BClkiyet%20esaslar%C4%B1na%20g%C3%B6re%20y%C3%B6netir). The founder may delegate the portfolio management function to another manager via a contract (subject to the CMB’s portfolio management regulations)[aa.com.tr](https://www.aa.com.tr/tr/ekonomi/spkdan-girisim-sermayesi-yatirim-fonlarina-iliskin-duzenleme/2001214#:~:text=,yararlan%C4%B1lmas%C4%B1%2C%20kurucunun%20sorumlulu%C4%9Funu%20ortadan%20kald%C4%B1rmaz), but even if management is outsourced, the founder retains ultimate responsibility towards investors and regulators[aa.com.tr](https://www.aa.com.tr/tr/ekonomi/spkdan-girisim-sermayesi-yatirim-fonlarina-iliskin-duzenleme/2001214#:~:text=,yararlan%C4%B1lmas%C4%B1%2C%20kurucunun%20sorumlulu%C4%9Funu%20ortadan%20kald%C4%B1rmaz). The fund’s investment decisions are typically made by an **investment committee** set up by the founder. The composition and decision rules of this committee (such as requiring a majority of independent or qualified members) are often stipulated in the issuance document.
    
* **Asset Segregation:** The assets of the fund are separate and ring-fenced from the assets of the founder, the custodian, and any asset manager involved[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=,ve%20portf%C3%B6y%20y%C3%B6neticisinin%20malvarl%C4%B1%C4%9F%C4%B1ndan%20ayr%C4%B1d%C4%B1r). The fund’s assets cannot be seized, attached, or used to satisfy debts of the founder or custodian, even in the event of bankruptcy or administration of those entities[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=%282%29%20%28De%C4%9Fi%C5%9Fik%3ARG,ve%20iflas%20masas%C4%B1na%20d%C3%A2hil%20edilemez). Even the founder’s own creditors have no claim on the fund’s assets, and likewise the fund’s creditors have no claim on the founder’s assets. This bankruptcy-remoteness is a fundamental principle ensuring investor protection.
    
* **Fee Structure:** VCIFs usually involve two main fees: a **management fee** and a **performance fee**. The management fee is an annual fee for operating the fund, often calculated as a percentage (e.g., 2%) of committed capital or net asset value, paid to the manager (founder). The performance fee (carried interest) is a share of profits (commonly 20%) paid to the manager/sponsor if the fund’s returns exceed a certain threshold (to align interests with investors). Both fees and how they are calculated must be transparently disclosed to investors and set in the issuance document. The CMB monitors that performance fees are calculated correctly and that they don’t unduly disadvantage investors; if any irregularity is detected, the CMB can require corrections[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=beyan%C4%B1n%20al%C4%B1nmas%C4%B1%20zorunlu%20de%C4%9Fildir,ettirildi%C4%9Fi%20ve%20fondan%20tahsil%20edildi%C4%9Fi).
    
* **Investment Limits:** The VCIF’s portfolio composition is subject to certain limits defined in the Communiqué. The core focus is on venture investments: at least **80% of the fund’s total assets must consist of venture capital investments** (equity or equity-like investments in qualifying venture companies)[erdem-erdem.av.tr](https://www.erdem-erdem.av.tr/bilgi-bankasi/girisim-sermayesi-yatirim-fonlari-ve-girisim-yatirimlari#:~:text=GSYF%E2%80%99nin%20temel%20yat%C4%B1r%C4%B1m%20alan%C4%B1%20giri%C5%9Fim,ancak%20belli%20bir%20oranla%20s%C4%B1n%C4%B1rlanm%C4%B1%C5%9Ft%C4%B1r). This ratio can be lowered to 51% if at least 10% of the fund is invested in ventures that qualify as SMEs under relevant definitions[erdem-erdem.av.tr](https://www.erdem-erdem.av.tr/bilgi-bankasi/girisim-sermayesi-yatirim-fonlari-ve-girisim-yatirimlari#:~:text=GSYF%E2%80%99nin%20temel%20yat%C4%B1r%C4%B1m%20alan%C4%B1%20giri%C5%9Fim,tamamen%20yasaklanmam%C4%B1%C5%9Ft%C4%B1r%2C%20ancak%20belli%20bir). The remainder of the portfolio (up to 20%) can be allocated to other assets for liquidity or temporary placement, as allowed by regulations – such as time deposits, government or corporate bonds, certain money market instruments, other investment funds, etc. However, high-risk strategies like short selling, leverage (margin trading), and derivative transactions are either prohibited or heavily restricted for VCIFs[erdem-erdem.av.tr](https://www.erdem-erdem.av.tr/bilgi-bankasi/girisim-sermayesi-yatirim-fonlari-ve-girisim-yatirimlari#:~:text=Fon%20toplam%20de%C4%9Ferinin%20en%20az,a%C3%A7%C4%B1k%20pozisyon%20tutar%C4%B1%2C%20fon%20toplam). (Derivatives, for instance, can only be used for hedging against specific risks, and even then, open positions cannot exceed 20% of the fund’s value[erdem-erdem.av.tr](https://www.erdem-erdem.av.tr/bilgi-bankasi/girisim-sermayesi-yatirim-fonlari-ve-girisim-yatirimlari#:~:text=Fon%20toplam%20de%C4%9Ferinin%20en%20az,a%C3%A7%C4%B1k%20pozisyon%20tutar%C4%B1%2C%20fon%20toplam).) If a fund is established as a **sharia-compliant fund**, meaning it will invest and operate according to Islamic finance principles, it can include the word “Katılım” (participation) in its name, provided that the issuance document commits the fund to adhere to participation finance principles in all its activities[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=j,yat%C4%B1r%C4%B1m%20ara%C3%A7lar%C4%B1).
    
* **Fund Term and Liquidation:** A VCIF is set up for a finite **term** (duration), which is stated in its issuance document (e.g., an 8-year term). Many VCIFs follow a model of an initial **investment period** (say 3–5 years) followed by a **harvest (divestment) period**, culminating in a total term of about 8–10 years. The fund documentation often grants the founder the right to extend the fund’s term by one or two years (to allow more time for exits if needed). When the fund reaches its term (including any extensions), it enters **liquidation**: the remaining portfolio holdings are sold or otherwise disposed of, and proceeds are distributed to investors. The liquidation process is carried out by the founder in line with the internal regulation and under CMB oversight. If a fund has fully exited all investments and sits in cash before its term ends, the founder’s board may seek an earlier termination of the fund with CMB approval. Any decision to extend the fund’s term or to liquidate early must be disclosed to investors (usually via KAP announcements). Once liquidation is completed, the fund’s internal regulation is removed from the trade registry, officially dissolving the fund.
    

These structural elements are designed to protect investor rights and ensure the fund is managed prudently and transparently. All details of the fund’s governance and operations are set out in the internal regulation and issuance document, which investors should review (these documents are available from the founder or via public disclosures on KAP).

## Interactions with Institutions and Regulatory Bodies

During the establishment and operation of a VCIF, various institutions and authorities are involved. Understanding their roles is crucial for compliance and smooth functioning:

#### Institutions Involved and Their Roles

| **Institution** | **Role and Responsibilities** |
| --- | --- |
| **Capital Markets Board (CMB/SPK)** | The regulatory authority that approves the establishment of the VCIF and its issuance document. The CMB sets the rules through communiqués, reviews the application file, and grants the necessary permissions for the fund’s formation and the sale of its units. It also supervises the fund’s ongoing compliance (investment limits, qualified investor-only sales, etc.), and reviews periodic reports and material events of the fund. In essence, no VCIF can exist without CMB approval and oversight. |
| **Central Registry Agency (MKK)** | The central depository institution responsible for the electronic record-keeping of securities in Turkey. MKK facilitates the **dematerialization** of the fund’s participation shares and tracks ownership on an investor-by-investor basis. It assigns an ISIN/fund code and maintains a registry of who owns how many units[pardusportfoy.com](https://pardusportfoy.com/wp-content/uploads/2023/12/A1-portfoy-Yonetimi-A.S.-Ikinci-GSYF-Ictuzuk.pdf#:~:text=,ve%20fiziken%20teslim%20edilemez). All transfers or changes in holdings of the fund’s units are processed through MKK’s book-entry system. The MKK also charges fees for its services (initial registration, ongoing maintenance, etc.), which are typically disclosed in the fund’s documentation. |
| **Istanbul Settlement and Custody Bank (Takasbank)** | Takasbank plays a dual role: it is commonly the **portfolio custodian** for the fund, and it also operates **TEFAS**. As a custodian, Takasbank (or another appointed custodian) holds the fund’s cash and securities in segregated accounts and oversees the fund’s transactions. It ensures the fund’s asset movements (investments, disinvestments, payments) comply with regulations, by performing oversight duties such as checking venture investment documentation before execution[aa.com.tr](https://www.aa.com.tr/tr/ekonomi/spkdan-girisim-sermayesi-yatirim-fonlarina-iliskin-duzenleme/2001214#:~:text=Tebli%C4%9F%27de%20fon%20portf%C3%B6y%C3%BCn%C3%BCn%20saklanmas%C4%B1na%20ili%C5%9Fkin,getirilebilmesini%20teminen%20portf%C3%B6y%20saklay%C4%B1c%C4%B1s%C4%B1na%20g%C3%B6nderilecek). As the operator of TEFAS, Takasbank is responsible for listing the fund on the TEFAS platform and enabling any inter-bank distribution or trading of the fund’s units (within the qualified investor scope). Takasbank is also integral to settlement of fund unit transactions and the safekeeping of any non-traditional assets the fund may hold (e.g. private company shares can be custodied via account entries). |
| **Portfolio Custodian (Depository)** | The institution providing custody services for the fund’s assets, as required by CMB’s portfolio custody regulations. Often this is Takasbank by default for many funds, but it could also be a qualified custodian bank. The custodian is named in the fund’s internal regulation. Its role is to hold the fund’s assets in trust and monitor fund transactions for compliance. The custodian has a duty to report any irregularities to the CMB. For instance, any loans given to the fund or borrowings by the fund (which are restricted) would be monitored by the custodian. The custodian effectively adds a layer of security by ensuring fund assets are separate from the manager and that they aren’t misused. |
| **Public Disclosure Platform (KAP)** | The electronic disclosure system where required information is publicly disclosed. Key events in the fund’s life – such as the CMB’s approval of its internal regulation and issuance document, the fund’s periodic financial statements (quarterly, yearly), changes in fund management, extensions of fund term, or the decision to liquidate – are announced through KAP. The founder (PMC) is responsible for making timely KAP disclosures. This transparency allows investors and the market to stay informed about the fund’s status. |
| **Independent Audit Firm** | The external auditor that conducts the annual audit of the fund’s financial statements. Upon fund establishment, an auditor is appointed and reported to the CMB. Each year, the auditor examines the fund’s financial reports, valuations of illiquid investments, and calculations of any performance fees, providing an audit opinion. The audited financials are submitted to the CMB and disclosed on KAP, giving investors confidence in the reported NAV and performance of the fund. The independent audit acts as a check on the fund’s valuations and financial integrity. |

In addition to the above, the VCIF may have interactions with the **Turkish Capital Markets Association (TSPB)** (which collects industry data and statistics) and the **Tax Authorities** (since certain tax incentives or obligations apply to funds and investors, e.g., withholding tax on distributions). However, the primary institutional interactions during establishment and operations are with the CMB, MKK, and Takasbank (custodian/TEFAS).

## Timelines and Key Timeframes

Various timelines and deadlines are built into the process of establishing and operating a VCIF. Below is a summary of important timeframes to be aware of:

* **CMB Approval Timeline:** After the application submission, the initial feedback from the CMB generally comes within a few weeks. The overall approval process usually takes around **1–2 months**, though it can vary. This depends on the completeness of the application and CMB’s workload. If the CMB requests additional information (which pauses the clock until the applicant responds), the timeline can extend. Prompt and thorough responses help keep the process on track.
    
* **Internal Regulation Registration & Issuance Application:** Once the internal regulation is approved by the CMB, it must be registered (and gazetted). Regulations stipulate that if the internal regulation (umbrella) is approved first on its own, the application for the fund’s issuance document should be made **within 6 months** of that registration[paksoy.av.tr](https://paksoy.av.tr/2024/03/gayrimenkul-yatirim-fonlari/#:~:text=Gayrimenkul%20Yat%C4%B1r%C4%B1m%20Fonlar%C4%B1%20,s%C3%BCre%20alt%C4%B1%20ay%20daha). This can often be extended by another 6 months by the CMB if needed. In practice, however, most funds get both the internal regulation and issuance approved in one go or in rapid succession, so this separate 6-month window is usually not encountered. It’s mainly relevant if a PMC sets up an umbrella structure and then waits before launching the first fund under it.
    
* **1-Year Fundraising Rule:** As mentioned, from the date the fund begins selling units (i.e., the offering start date), the founder has at most **one year** to reach the minimum required commitment of 50 million TL[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=asgari%2050,sat%C4%B1%C5%9F%C4%B1na%20ba%C5%9Fland%C4%B1%C4%9F%C4%B1%20tarihi%20m%C3%BCteakip%20en). If the one-year mark passes without meeting the threshold, the fund must be terminated and cannot continue towards investing. Founders should plan their fundraising and marketing accordingly to meet this deadline, possibly setting an earlier internal deadline to allow time for contingency.
    
* **Investment Deployment Period:** After collecting the committed capital (at least the minimum amount), the fund is expected to deploy that capital into ventures within a certain timeframe. The issuance document will define the *investment period* (commonly 2 to 4 years from the fund start). By regulation, all collected funds should ideally be invested within **2 years** after final closing[prmfinans.com](https://www.prmfinans.com/iii-52-4-girisim-ser-yf#:~:text=ge%C3%A7%20bir%20y%C4%B1l%20i%C3%A7inde%20kaynak,ba%C5%9Flang%C4%B1%C3%A7%20tarihinden%20fon%20portf%C3%B6y%C3%BCn%C3%BCn%2019). While not all funds invest exactly within two years, the regulation’s intention is that the fund should not sit on cash for long; any significant idle cash beyond two years is not typical unless reserved for follow-ons, and in any case the Communiqué emphasizes timely investment.
    
* **Fund Term and Extensions:** The life of the fund (term) is set in the issuance document (e.g., 8 years from final closing). Many VCIFs also include options for the founder/manager to extend the term by, say, 1 or 2 additional years (often one year at a time) to allow exits to be realized optimally. These extension provisions and the maximum total term are disclosed to investors up front. When the fund’s term (including any extensions) expires, the fund **must liquidate** and return money to investors. If the fund completes its exits earlier, the manager can seek to liquidate the fund early with CMB approval. Any extension exercise or early liquidation plan must be reported to investors (commonly via KAP). It’s also worth noting that if the fund is structured as an umbrella with multiple sub-funds, each sub-fund will have its own term; the umbrella exists as long as at least one sub-fund is active.
    
* **Periodic Reporting Deadlines:** The fund is required to calculate and report its net asset value regularly. Typically, funds provide quarterly reports to their investors and the CMB. Annual audited financial statements must be prepared and submitted within a few months after year-end (exact timing as per CMB’s financial reporting timetable, often 60-90 days after year-end). These reports give an updated valuation of the portfolio and are crucial for transparency. The audit ensures that these valuations are credible, especially given the illiquid nature of venture investments.
    
* **Tax-Related Timeframes:** While VCIFs themselves are exempt from corporate income tax in Turkey, any withholding tax on distributions to investors or other tax obligations have their own schedules. For example, if the fund distributes profits to individual investors, there might be a withholding tax to remit by the 26th of the following month via a tax return (this is just an example timeline for context). Investors also need to consider holding period requirements for incentives (for instance, foreign investors obtaining Turkish citizenship via investment need to hold fund units for at least 3 years[mkk.com.tr](https://www.mkk.com.tr/sites/default/files/2024-01/Merkezi_Kaydi_Sistem_Is_ve_Bilisim_Uygulama_Ilke_ve_Kurallari_Yonergesi_26012024.pdf#:~:text=MKK%20sisteminde%20kayd%C4%B1%20tutulacak%20menkul,uygun%20olmas%C4%B1n%C4%B1n%20yan%C4%B1s%C4%B1ra%20menkul)).
    

## Conclusion and Summary

Establishing a Venture Capital Investment Fund in Turkey is a multi-step process that requires careful planning and strict adherence to CMB regulations. Key prerequisites include having a licensed portfolio management company (with substantial capital and qualified personnel) and ensuring compliance with specific experience requirements on the management team. The establishment steps involve preparing a detailed application dossier, including the fund’s internal rules and offering document, and obtaining the CMB’s approval. Once approved, further coordination with infrastructure institutions like MKK and Takasbank is necessary to operationalize the fund (dematerializing units and setting up custody and distribution mechanisms). The fund can then commence raising capital from **qualified investors** only, under structured commitment agreements that protect investor interests.

A Turkish VCIF provides a vehicle to channel investments into the startup ecosystem while offering investors the potential for high returns commensurate with high risk. However, given their long-term, illiquid nature, the regulations enforce discipline, such as fixed fund durations and qualified investor restrictions, to ensure these funds operate within a framework that safeguards investors and the integrity of the market. The guide above has detailed each step – from initial licensing considerations to fundraising and eventual fund termination – including necessary approvals, documents, timelines, and interactions with relevant institutions. By following these guidelines and complying with the SPK’s communiqués, a sponsor can successfully establish a CMB-approved venture capital investment fund and begin deploying capital into ventures