Capital Market Board defines the term ‘venture capital investment fund’ (GSYF) as follows: an asset fund established under a bylaw and for a certain maturity period by a portfolio management company or a venture capital portfolio management company licensed by the Capital Market Board, funded by cash or shares collected from qualified investors against participation shares, operated as a portfolio consisting of the assets and trading transactions defined in the legislation in accordance with the fiduciary property principles in favor of the participation share holders, having no legal person status.*
Venture Capital Investment Funds allow qualified investors to invest in venture capital and are subject to the conditions summarized below:
1. Venture capital investment funds (GSYF) may only be established by portfolio management companies and real estate portfolio management companies, and GYF participation shares may only be sold to qualified investors.
2. Minimum 80% of the total value of a GSYF must be invested in venture capitals. Such investment can be made by employing the methods of direct or indirect partnership, lending mezzanine finance to a venture company, or buying debt instruments issued by venture companies.
3. The assets included in the portfolio of a GSYF must be stored by an independent portfolio depository service provider in accordance with the international applications.
4. Different types of participation certificate may be created for GSYF in accordance with the international private equity model. Thus GSYF may issue general partners (GP) shares and limited partners (LP) shares. The rights and responsibilities of holders of participation shares must be specified in the bylaw of a GSYF and in the investor agreement to be signed by and between each holder of participation shares and GSYF.
5. A qualified investor must undertake to provide the GSYF with funds payable on various dates, and must agree to provide THE GSYF with a minimum total fund of TL 5 million. This undertaking must be fulfilled within one year after the GSYF was established, and the portfolio of the GSYF must be established within the next year.
6. GSYF may be represented by the Board of Directors of the portfolio management company which establishes it, or one or more executive members to be appointed by the Board of Directors. The bylaw and participation share certificates of a GSYF may state whether or not a performance fee will be charged by the fund manager for the venture capital portion of the portfolio of that GYF.
In order to comply with the interest-free financing principles, a real estate investment fund must invest and must be managed in accordance with the said principles and be approved by the Advisor Board.
*Venture Capital Investment Fund Communique III-52.4, Turkish Official Gazette, 28874, 7 June 2014