What regulatory steps are needed to establish a private equity fund in Turkey and obtain SPK approval?

Should you plan to establish a private equity fund targeting mid-market companies in Turkey, the process must be carried out within the framework of the Venture Capital Investment Fund (GSYF) structure and the regulations of the Capital Markets Board of Turkey (CMB/“SPK”). In this regard, please note that the fund may only be established through a Portfolio Management Company (PYŞ) licensed by the SPK, that the PYŞ must hold the specific authorization for venture capital portfolio management, and that the fund’s assets must be held with a custodian institution authorized by the SPK. The fund’s internal regulations (by-laws) and prospectus are subject to SPK approval, and all disclosures and investor information must be prepared in full compliance with applicable legislation. The fund’s valuation principles, risk statements, and periodic financial reporting obligations must also be duly fulfilled. Following the establishment of the fund, the PYŞ is required to submit periodic financial statements, activity reports, and portfolio composition reports to the SPK. Additionally, the corporate tax exemption granted to GSYFs and the withholding tax advantages available to investors constitute an important element in structural and tax planning. Considering the AML/KYC compliance requirements for accepting foreign investors, the need for tailored provisions in investor agreements and in the fund’s by-laws and prospectus, as well as the technical nature of the SPK application process, obtaining professional legal assistance from a law firm during the establishment and operational phases of the fund is both necessary and highly beneficial in practice.

Should you plan to establish a private equity fund targeting mid-market companies in Turkey, the process must be carried out within the framework of the Venture Capital Investment Fund (GSYF) structure and the regulations of the Capital Markets Board of Turkey (CMB/“SPK”). In this regard, please note that the fund may only be established through a Portfolio Management Company (PYŞ) licensed by the SPK, that the PYŞ must hold the specific authorization for venture capital portfolio management, and that the fund’s assets must be held with a custodian institution authorized by the SPK. The fund’s internal regulations (by-laws) and prospectus are subject to SPK approval, and all disclosures and investor information must be prepared in full compliance with applicable legislation. The fund’s valuation principles, risk statements, and periodic financial reporting obligations must also be duly fulfilled. Following the establishment of the fund, the PYŞ is required to submit periodic financial statements, activity reports, and portfolio composition reports to the SPK. Additionally, the corporate tax exemption granted to GSYFs and the withholding tax advantages available to investors constitute an important element in structural and tax planning. Considering the AML/KYC compliance requirements for accepting foreign investors, the need for tailored provisions in investor agreements and in the fund’s by-laws and prospectus, as well as the technical nature of the SPK application process, obtaining professional legal assistance from a law firm during the establishment and operational phases of the fund is both necessary and highly beneficial in practice.