e-book2013

NEWSLETTER 2013

220

The Regulation regarding Angel Investment Capital

Att. Ozgur Kocabasoglu

Introduction

Until recently, there was not any specific regulation in Turkey with

respect to providing financing to entrepreneurs who had unique ideas and

projects but not enough funding. However, there were indications of the

preparation of a regulation regarding this issue.

Angel investment capital is a financial tool for start-up or growth

stage ventures that lack financing; it is a system where real persons

provide financing or become a shareholder by providing capital to such

ventures. State support for angel investment capital was introduced with

provisional Article 82 annexed to the Income Tax Law (“ITL”) and

additional article 5 of the Law regarding the Organization and Duties of

the Undersecretariat of Treasury which was added with Article 14 of the

Law numbered 6327.

The Regulation regarding Angel Investment Capital (“AICR”

or “Regulation”), which was published in the Official Gazette dated

15.02.2013 and numbered 28560, contains principles and procedures

regarding state support of angel investment capital and supervision of the

activities of the investors. Within this article, the innovations brought by

AICR shall be analyzed.

Benefiting from State Support

AICR stipulates that real persons investing as an angel investor to a

venture firm may benefit from state support. The aim of this regulation

is to entice investors and accordingly increase the number of investments

qualifying as innovations. AICR and provisional Article 82 of the ITL set

forth the conditions required to benefit from such state support. Pursuant

to the Regulation, angel investors must hold the acquired participation

shares, which belong to the venture company, for at least two years and

Article of February 2013