REGULATION ON BUSINESS ANGELS

PART ONE

Purpose, Scope, Legal Basis and Definitions

Purpose and scope

Article 1–(1) The purpose of this regulation is to determine procedures and principles
regarding the support for Business Angel Capital, a financial instrument for start-ups and
early stage enterprises experiencing difficulties in access to finance due to the high risk they
have; monitoring, supervision and termination of activities of Business Angels and
individuals, institutions and organizations subjected to the Law on the Structures and Duties
of the Undersecretariat of Treasury no. 4059 additional Clause 5, dated December 9, 1994.

Legal Basis

Article 2–(1) This regulation is prepared on the basis of Additional Clause 5 of the
Law on Structure and Duties of the Undersecretariat of Treasury.

Definitions and abbreviations

Article 3–(1) In this Regulation, the following expressions have the below meanings:

a) Accreditation: Authorization of the Business Angel Networks by the

Undersecretariat, under the Additional Clause 5 of the Law,
b) Business Angel Capital (BAC): Capital in cash transferred to the firms by Business
Angels within the scope of this Regulation,
c) BAC Legislation: Provisional article 82 of law on Income Tax no. 193, dated on
December 31, 1960, Additional Clause 5 of law on Structure and Duties of the
Undersecretariat of Treasury, this Regulation and other relevant legislations,
d) Business Angels (BA): Real persons who transfer their private property and/or
experience and background to start up and early stage enterprises.
e) (Amendment, O.G. December 24, 2014-29215) Business Angel Network (BA
Network): Legal entities, which bring the entrepreneurs and BAs together as an
intermediator, established by BAs in reliance upon the provisions of the law on
Turkish Civil Code no. 4721, dated on January 11, 2011, or Law on Turkish
Commercial Code no. 6102, dated January 13, 2011 for Turkish Commercial
Code,
f) Business Angel License (BA License): A certificate given to BAs, who meet the
criteria determined by the Undersecretariat, and that enable them to benefit from
the state aid,
g) Entrepreneur: Real or legal persons established or aspiring to establish their own
businesses based on a business idea,

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 h) Venture Company: A joint-stock company that BAs are to become a partner by
investing into the business through acquisition of shares,
i) Business Plan: A plan to be submitted to the Undersecretariat by BA and showing
the activities and sectors to be invested in a timetable,
j) Law: Law on Structure and Duties of the Undersecretariat of Treasury no. 4059,
dated on December 9, 1994,
k) Board: The Board of Treasury Controllers,
l) Undersecretariat : Undersecretariat of Treasury,

PART TWO

Benefitting from State Aid and Licensing

Benefitting from the state aid

Article 4–(1) In the scope of the provisional article 82 of the Income Tax Act, it is
compulsory for BAs to meet the criteria stated in this regulation by Undersecretariat and hold
the shares of full-fledged taxpayer venture companies, acquired by BAs, minimum 2 full
years in order to benefit from state aid. This biennium starts after transferring capital in cash
to the partnership bank account, which opened for venture company in the scope of article 25
of this regulation. It is compulsory that the committed funds have to be transferred as cash to
the partnership bank account in order to initiate a 2-full-year duration and benefit from tax
incentive of the capital committed by BA.

(2) (Amendment, O.G. December 24, 2014-29215) BAs may deduct 75% of the
amount of shares from their income and earnings stated in annual tax statement in the period
they acquired the shares in compliance with the provisions on valuation of the law on Tax
Procedural Law no: 213, dated January 4, 1961. This rate is applied as 100% for BAs
investing corporations, whose projects are supported, under the scope of research &
development and innovation programs determined, by Ministry of Science, Industry and
Technology, the Scientific and Technological Research Council of Turkey, Small and
Medium Enterprises Development Organization in the last 5 years before the date of
application to Undersecretariat for the tax support. The amount of deduction cannot exceed
TL 1.000.000 annually.

Business Angel License

Article 5–(1) Real persons operating as a BA should have the BA License in order to
benefit from the tax incentive.

(2) In order to get the BA License, BA should carry one of the conditions of the
definitions relating to a person with high income or wealth or experienced investors, specified
below:

(a) High income or wealthy investors are defined as follows:

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 1) (Amendment, O.G. December 24, 2014-29215) Investors whose total gross
amount of income in the income tax statement, or annual wage of the wageworker are
reported to be at least TL 200.000, within the last two years, before applying for the license
or,

2) (Amendment, O.G. December 24, 2014-29215) Investors whose total amount of

wealth including every type of moveable and immovable assets are at least TL 1.000.000 at
the time of the application.

However, the following assets are excluded from the calculation of individual wealth
value; individual’s residence resided in or any credits obtained through putting mortgage on
this residence, rights arising out of insurance contracts and pension rights arising from
qualifying for a pension and life insurance payments.

(b) Experienced Investors are defined as;

1) Those investors who have at least 2 years’ experience as a fund or portfolio

manager in banks and financial institutions, manager or equivalent or a higher position in
SME finance, project finance or corporate finance departments of a bank and financial
institution or, manager or equivalent or a higher position in venture companies; or,

2) (Amendment, O.G. December 24, 2014-29215) Those investors who have been
working at least 2 years as deputy general managers or equivalent or a higher position in an
enterprise with annual turnover of minumum TL 25.000.000 at least two years within the last
five years before obtaining the license; or,

3) (Amendment, O.G. December 24, 2014-29215) Those investors who have been
members of a BA Network for at least 1 year before obtaining a license and who have been
shareholders as a BA in at least one or more non-public companies whose net sales are below
TL 5.000.000 in the previous fiscal year; or,

4) (Amendment, O.G. December 24, 2014-29215) Those investors who have at least
2 years work experience in the domestic incubator or technology development centers which
are established for supporting the start-ups and growth phase companies and who have
invested minimum TL 20.000 at least one or more start-up or growth phase companies
operating in these centers.

License Application

Article 6-(1) Applications for the BA license shall be made through BA Networks to
the Undersecretariat with the information and documents specified in the Article 7 of this
regulation.

(2) License applications of those persons, except for those who committed negligent
offenses or sentenced a short-term alternative sanctions to imprisonment other than the
following infamous crimes such as simple or qualified embezzlement, extortion, bribery,
theft, fraud, forgery, breach of trust, fraudulent bankruptcy, misfeasance and the crimes on

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smuggling and excise offenses other than using the official bidding or purchasing rigging,
laundering the property acquired from crime disclosure of state secrets, and the tax fraud,
shall not be accepted, even if they fulfill the criteria specified in Article 5 above.

Documents required for the license application

Article 7- (Amendment, O.G. December 24, 2014-29215)

(1) BA which will apply for the license shall submit the following documents to the
Undersecretariat through the BA Networks in accordance with either of the definitions of the
investors with the high income or wealth or the experienced investors:

a) For those investors with high income or wealth;

1) The photo application form filled by BA in line with the form template in the
Appendix 1 of this regulation,

2) The copy of the annual income tax statement, approved by the related tax office or
public notary, or financial advisor showing that the annual gross income is at least TL
200.000 during the previous two years before the application, for the wageworkers, the
document signed by the authorized person of the company that the applicant has been
working for the last two years or the ownership documents of the real-estate that has been
approved by the municipality or one or more real-estate experts licensed by the Capital
Market Board according to the current market value of the real estate and other Turkish or
foreign exchange capital market instruments, and the Turkish money and/or foreign exchange
bank account information signed by the authorized persons of the banks and institution in
which these investment vehicles are kept, and/or copies of Turkish Trade Registration
Gazette, shareholders certificate book and the most recently prepared balance sheet indicating
the monetary amount of the shareholding in paid-in capital of non-public companies showing
that the personal wealth of the applicant is at least TL 1.000.000,

3) Curriculum Vitae and identity sample

b) For the experienced investors;

1) A photo application form filled in line with the form template Appendix 1 of this
regulation,
2) A signed document by the concerned authority of the BA Network indicating that
at least one year membership in the BA Network before the date of application, , a sample of
Turkish Trade Registration Gazette showing that being a partner of one or more non-public
company, whose net sales for the previous fiscal year do not exceed TL 5.000.000, if
available, recently prepared balance sheet and statement of income for the last two fiscal years
and the shareholders certificate book of these companies or;

3) Documents signed by the authorized persons of the related institutions proving that
the persons have at least a 2-year-old experience as a fund or portfolio manager in a bank and
a financial institution or, a manager or equivalent or a higher position in SME Finance, project

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finance or corporate finance departments of a bank and financial institution or manager or
equivalent or a higher position in venture companies; or,

4) Document and income statements of the related years signed by the authorized
persons of the related institutions proving that the persons have at least a 2-year-old
experience within the last five years before obtaining the license as a deputy general manager
or equivalent or a higher position in an enterprise with annual turnover of at least TL
25.000.000, or document approved by financial advisor providing that the revenue of the
enterprise is more than TL 25.000.000 in related years; or,

5) Each copies of Turkish Trade Registry Gazette, partners share register, and the most
recent balance sheet signed by the authorized persons of the related centers authenticating that
persons have at least a 2-year-work experience in the domestic incubator or technology
development centers which are established for supporting the start-ups and growth phase
companies and invested minimum TL 20.000 at least one or more start-up or growth phase
companies operating in these centers,

6) Curriculum vitae and identity sample.

(2) For foreign BA, work permit documents granted by the Ministry of Labour And
Social Security and residence permit documents granted by the Minister of Internal Affairs
shall be sent.

(3) Undersecretariat may request list of authorized signatures of persons who sign
substitutive documents, if it is necessary.

License Duration

Article 8- (Amendment, O.G. August 21, 2013-28742)

(1) The license granted to BAs is valid for five years; this period begins at the date
of granting the license document (Annex 2) to the BA by the Undersecretariat. The beginning
of the validity period of BA license is specified in the License. At the end of the validity
period, BAs may apply for the renewal of the License through accredited a BA Network with
the documents specified in the Article 7 of this regulation. License renewal requests are
evaluated according to criteria to be determined by the Undersecretariat, and the BA license
period can be extended for a periods of five years.

License Transfer

Article 9-Licenses granted by the Undersecretariat shall not be transferred to other

person.

Storage of License Information

Article 10-The Undersecretariat keeps a copy of the license and stores information of
license holder in the information system. If a license is lost and this loss of license reported to

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the Undersecretariat by the BA, the new license shall be granted to BA by revoking the ex-
one.

Conditions for the cancellation of the license

Article 11–(1) Conditions which require the cancellation of licenses are as follows:

a) BA’s loss of capacity to act.

b) Detection of the loss of licensing criteria.

c) Death of BA.

d) Use of capital invested in the venture company for the purposes not specified
in the business plan.

e) Sharing the false information and documents with the Undersecretariat

intentionally and attempted-deceit against Undersecretariat.

f) Not complying with the sectoral restrictions in Article 13, investment

restrictions in Article 14, and shareholder ratio in Article18,

(2) If it is determined that the existence of violation of (d) and (e) provisions of Article
11-1 and also violation of other provisions of this regulation, the Undersecretariat primarily
warns BA and the venture company. Despite this warning, if the violation is not ended within
the time period of no less than one month and not more than three months or when it is not
possible to terminate the violation, the Undersecretariat shall cancel the license.

(3) In case of existence of the situations stated in the Article 11 paragraph 1

subparagraph (d), (e) and (f), in order to withdraw the tax support provided for the
investments that constitute the act of infringements described in these subparagraphs, the
Revenue Administration is informed by the Undersecretariat by an official letter within two
months.

(4) BA, whose BA License has been canceled, shall not apply for a new BA License
for two years following the termination of the BA License. The new license application shall
not be accepted before the end of this biennium. Terminated license documents shall be
returned to the Undersecretariat by the BA in a month following the termination.

Confidentiality of BA’s identity

Article 12-(1) Without prejudice to conditions set forth in the applicable law by
judicial and administrative authorities, credentials of licensed BA are kept confidentially by
the Undersecretariat.

(2) (Amendment, O.G. December 24, 2014-29215) The Undersecretariat may

publish the identity and contact information of BAs, venture companies invested by BAs with
written permission of BAs. If necessary, Undersecretariat may require written permission of
other shareholders of venture firm in order to publish.

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 PART THREE

Issues Subject to BA’s Investments

Investment limitations and operation fields

Article 13-(1) BAs shall receive state aid for their investments up to twenty different
joint stock companies excluding co-investments referred in the fourth chapter during five-year
validity period of their license. The state aid is not provided to BA investments which are
outside the list of sectors or activities. In case of detection of violation of this article, the
second and third paragraphs of Article 11 shall be applied.

Minimum and Maximum Investment Amounts

Article 14–(Amendment, O.G. December 24, 2014-29215)

(1) In order to benefit from the deduction the capital invested by BA to venture
company, worth of each acquired venture company shares will not be under TL 20.000
including premium on issued shares or above TL 1.000.000 in annual basis. However, sum of
the investments to be made by a BA to different venture companies may exceed this amount.

(2) For co-investments, putting the maximum amount of capital to each venture
company on annual basis shall be TL 2,000,000 including premium on issued shares provided
that BA report the situation to Undersecretariat as stated in the fourth part. In case of BA’s not
having determined requirements for co-investment, total capital invested in each venture
company by BA will not exceed TL 1.000.000 including premium on issued shares annually.

Application to the undersecretary

Article 15–(1) BAs apply with the documents stated in Article 21 to the
Undersecretariat in order to benefit from the tax support for investments which they make to
venture companies. These applications are made by BA Network on behalf of BA which is a
member of that network. In case of violation of BAC regulations, applications will be given
back. If some issues require amendments, revision request is reported to BA Network with
their justifications.

Business plan

Article 16–(1) In order to benefit from tax support for capital invested by BA to
venture company, BA is required to submit business plan agreed with venture company or
entrepreneur. Business plans specifying purposes of using the capital invested by BA to
venture company and time schedule shall be prepared in accordance with the template in
Annex 3 of this regulation. Business plan is a declaration of showing BA's investment plan.
Business plan is used for the purpose of following the realization of investment phases. In
case of a change in the business plan submitted to the Undersecretariat, updated business plan
shall be sent to the Undersecretariat within one month from the amendment date.

Articles of association

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 Article 17–(1) BA and entrepreneur prepare articles of association in accordance with
their needs and priorities. Draft articles of association shall be sent to the Treasury before its
final status within the scope of Article 21. The Undersecretary controls whether there is any
provision contrary to BAC legislation in the provisions of articles of association.

(2) Entrepreneur and BA may form contract or contracts that guarantee their mutual
rights and liabilities except from articles of association. However, formed contracts will not
contrast with the provisions of articles of association.

(3) BAs shall not demand from entrepreneur to sign debt-inducing document, shall not
receive mortgage, pledge as collateral, shall not request guarantee assignment and dividends
in return for their investment in the venture company. If it is determined, BAC investment is
removed from support scope and BA license may be terminated. If any support granted,
Revenue Administration shall be informed to withdraw the support within the transitional
provisions of Article 82 of Income Tax Law.

Minimum and Maximum Partnership Ratio

Article18–(1) BAs and business angels’ partnerships will not control the venture
company directly or indirectly, individually or together and shall not have the majority of
shares. BAs, individually or together or his/her spouse or together with their spouses or with
their descendants and ascendants including their third degree relatives and far relatives, shall
not have shares that represents total vote rights more than %50 directly or indirectly and will
not assign more than 50% of the board members. BAs may have privileged shares ensuring
the right to be represented on the board. Without prejudice to the provisions of this Article,
for important issues, BA and entrepreneur can determine freely privileges granting veto power
to BA on management of venture company and scope of imposing restriction to entrepreneur.
If any violation of this Article is determined, provisions of the second and third paragraph of
Article 11 are applied.

BA’s participation in the management of venture company

Article 19–(1) BA’s participation in the management of venture company is limited to

participation in the official management body. This participation is realized through general
assembly, management or advisory board or committee. BA shall not have administrative role
except for role in administrative board and shall not work as a company staff. BA shall not get
wages or salary from the venture company in any form. If any violation of this Article is
determined, provisions of the second paragraph of Article 11 are applied.

Disclosure of confidential information

Article 20 – (1) BAs and BA partnerships shall not disseminate and use information
deemed as trade secret without the written approval of the entrepreneur. Entrepreneur may
request signing a contract aiming of protection of trade secrets from BA. If any violation of
this Article is determined, provisions of the second paragraph of Article 11 are applied.

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 Application documents

Article 21–(1) BA, who wants to benefit from state aid for BAC investment, shall
apply to invest by submitting the following documents to the Undersecretariat through
accredited BA network before making an investment

a) Business plan.
b) The draft articles of association including the principal activity of the venture
company, the shareholding structure, registered and paid-in capital, existing
partners and other issues in accordance with the Turkish Commercial Code.

c) Identity information and resume of partners of the venture company.

d) (Amendment, O.G. December 24, 2014-29215) A covenant indicating that there

are no ties of kinship between partnered entrepreneurs and BA which may constitute a
violation of the Temporary Article 82 of the Income Tax Act, and there are no controlling
shareholder relations between BA and venture company.

e) A covenant indicating that partners of the venture company will comply with the
regulations under the Additional Article 5 of the Law.

f) The document certifying the status received from the relevant authorities to benefit
from 100% tax support in case of investment in a venture company whose projects are
supported in the last five years within the scope of the research, development and innovation
programs specified by Ministry of Science, Industry and Technology, The Scientific and
Technological Research Council of Turkey and Small and Medium Enterprises Development
Organization.

(2) Undersecretariat controls whether the Business Plan and the company's articles of
association constitute a violation of Additional Article 5 of the Law, temporary Article 82 of
the Income Tax Act and this regulation. Besides this, Undersecretariat has no responsibility
on the Business Plan and the company's articles of association.

Establishment of venture companies

Article 22–(1) The foundation of the new venture company between BA and
entrepreneurs company takes place by proclamation of the articles of association in the
Turkish Trade Registry Gazette, following the finalization of the articles of association of the
company in accordance with the provisions of this regulation. Establishing a partnership with
an existing company is done by making the necessary amendments in the company's articles
of association, showing that the BA is a partner of the company, in accordance with the
provisions of this regulation and publishing these amendments in the Turkish Trade Registry
Gazette. In both cases, shareholding structure is entered in the company's share register and
all information and documents are delivered to the Undersecretariat. If the documentation is
not delivered to the Treasury within the time specified in Article 23 without providing
righteous causes, the application shall be cancelled. If the necessary information and
documents are provided after the cancellation, the application shall be renewed.

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 (2) Acquisition worth of the capital or shares including issue premiums shall be
deposited in cash to the bank account of the venture company in order to strengthen capital
structure of the company through fulfillment of the capital commitments for a recently
established company, or recapitalization of an already existing company. The acquisition
costs of the shares deposited into the bank account of the venture company in cash shall be
spent or transformed into physical investments as specified in the Business Plan within twelve
months from the date of entry into account.

Finalization of the applications

Article 23–(1) A copy of the Turkish Trade Registry Gazette containing registered
articles of association of the company and the bank statement signed by the authorized
persons in the bank showing the actual transfer of amount of the acquisition cost of the shares
stated in the business plan to the bank account of the partnership opened on behalf of the
venture company shall be sent to the Undersecretariat through the accredited BA Networks in
three months following the submission of the documents specified in the Article 21 and the
approval of the application by the Undersecretariat . Undersecretariat shall notify to the
relevant tax authority in a month after the fulfillment of the requirements specified in this
article so that the BA shall benefit from the tax support.

Amendments in the articles of association of the venture company

Article 24–(1) In case of any difference between the draft articles of association of the
company prepared under the Article 339 of the Turkish Commercial Code presented during
the application and the articles of association published in the Turkish Trade Registry Gazette,
the reasons for this difference shall be explained by the BA to the Undersecretariat with an
official letter. Undersecretariat examines these changes whether they constitute an act of
infringement pursuant to the related laws and the provisions of this regulation. If there is an
act of infringement, the Undersecretariat asks the investor to amend the violations.

(2) In case of any amendments in the articles of association of the company within two
years starting from the date of support, the Undersecretariat shall be informed within a month
from the date of amendment.

Opening partnership bank account

Article 25–(1) Share worth of venture company which is acquired by BA is kept in a

commercial bank account opened exclusively. This bank account is managed by venture
company but qualification of this account requires the joint signature on expenses over a
certain amount which is determined by BA. This account, exclusively, is essential to use
financing the activities of venture company specified in the business plan by the venture
company.

(2) Certification documents accepted by the Tax Procedure Law are taken into
consideration when evaluating all payments and transfers procedures to be made from this
account. Monthly records of this bank account are held by venture company and if necessary
they shall be submitted to the Revenue Administration and the Undersecretariat. If any

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violation of this Article is determined, provisions of the second paragraph of Article 11 are
applied.

Qualification of the invested company

Article 26–(1) Companies, in which BAs invested, shall be a joint stock company
subject to the Turkish Commercial Code for the BAs in order to benefit from state aid. The
company, shares of which are acquired by BAs, shall have the following requirements in
order to benefit from the state aid:

a) The net annual sale of the venture company shall not be more than TL
5,000,000 for the last two fiscal years before the partnership of BA.

b) Having maximum of 50 employees.

c) The company shall not be depended to or not be under the influence of BA,
his/her wife, or his/her wife’s/husbands descendants and ancestors with third degree relatives
and their kinship directly or indirectly in terms of capital, administration or supervision.

d) Not being under the control of another company.

e) Operating in sectors or activities which determined by the Undersecretariat and

specified in appendix 4 regarding the list of sectors providing state aid.

f) Its shares shall not be offered to the public.

Not investing in illegal areas

Article 27–(1) Venture companies shall not engage in immoral activities or illegal
activities carried out by income obtained from suspicious or illegal sources. These activities
refer to income obtained from financial smuggling, trading of weapons, illegal ways, immoral
and criminal activities such as women trafficking, organized crimes, and corruption. If any
violation of this Article is determined, the provisions of the second paragraph of Article 11
are applied.

PART FOUR

Co-investment of BAs

Kind of partnership

Article 28–(1) In case of being invested in a venture company by at least two licensed
BA; these investments are named as BA co-investment. All of these partners are subject to
Turkish Commercial Code provisions made for partners of joint-stock company.

Leading partner of a co-investment

Article 29–(1) BAs determine a person among themselves as a leading partner in co-
investments made by BAs. Leading partner submits business plan to the Undersecretariat on

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behalf of the partnership and delivers information and documents requested by the
Undersecretariat via BA Networks.

Limit in co-investments

Article 30–(1) BAs shall receive state aids for co-investments invested in maximum
twenty different corporations by them excluding their individual investments, during the five-
year validity periods of licenses. State aid shall not be provided for investments that exceed
the said limit. Bas, who made co-investments, shall act as a leading partner in the most five
investments simultaneously. The maximum amount of investment to be invested in each
venture company shall be TL 2.000.000 annually for the BAs co-investment. The minimum
investment amount specified in the Article 14 is valid for each of Bas, who made co-
investment.

Selection of a leading partner

Article 31–(1) BAs may freely determine a person among themselves as a leading
partner. BA should jointly inform to the Undersecretariat about co-investment decision and
leading partner through BA Networks. Investments which made by BAs without this written
declaration are subject to the restrictions brought for BAs individual investments.

PART FIVE

BA Networks

Accreditation of BA networks

Article 32–(1) The Undersecretariat shall accredit BA Networks if they meet the
criteria for accreditation specified in the Article 34.The Undersecretariat may collaborate with
accredited BA networks for monitoring and supervising the activities of BA. The
Undersecretariat shall not collaborate with non-accredited BA Networks for monitoring and
supervising the activities of BA.

Accreditation application

Article 33–(Amendment, O.G. December 24, 2014-29215)

(1) Accreditation applications shall be made to the Undersecretariat with the

information and documents certifying the criteria specified in the Article 34. Legal entities
committing to establish a BAN providing criteria specified in the Article 32 and Article 34 of
the Regulation by applying to Undersecretariat of Treasury shall directly make application of
BAN, 5 license applications of its members and 5 investment applications to Undersecretariat.
Accreditation application is to be completed in 12 months after commitment date of BAN.
Otherwise, further accreditation applications of BAN authority(s) who committed to provide
accreditation criteria are not accepted.

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 Accreditation criteria

Article 34–(1) In order to be accredited by the Undersecretariat; BA networks shall

fulfill the following conditions:

a) BA networks shall have a venue which has sufficient equipment, the details
identified by protocol, to enable BA and entrepreneurs to come together.

b) At least one person who has at least bachelor's degree must be employed. This
person is expected to make prior selection of entrepreneurs’ projects.

c) (Amendment, O.G. December 24, 2014-29215) BA Networks shall have five

licensed investors and these investors must totally invest in at least five companies whose net
sales are below TL 5.000.000 in the previous fiscal year.

d) BA Networks shall have a functional web pages and database.

e) BA Networks shall sign the protocol issued by the Undersecretariat.

Duration of the accreditation

Article 35–(1) Accreditation shall be issued by the Undersecretariat for five years. If
the BA Network applies for the reaccreditation at the end of this period, the Undersecretariat
shall control whether the accreditation criteria are met. If the criteria are met, the
Undersecretariat may renew the accreditation for five-year periods, taking into account the
past performances of the network and successes of it in complying with the regulations of the
Undersecretariat.

Rights granted to the accredited BA networks

Article 36–(1) BAs shall apply via accredited BA networks in order to benefit from
the state aids for their investments. BAs can be affiliated to more than one BA networks.

Obligations of the accredited BA networks

Article 37–(1) BA networks monitoring and supervising of BAs;

a) Submitting periodic reports on six-monthly basis that are requested by the

Undersecretariat in order to monitor compliance with the business plan submitted to the
Undersecretariat by their BA members,

b) Reporting infraction of rules related to their members in accordance with the

framework determined by the Undersecretariat,

c) Providing statistical information in time requested by the Undersecretariat,

shall fulfill the above duties.

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 (2) (Amendment, O.G. December 24, 2014-29215) Accredited BANs are obligated
to keep the privacy of BAs. The enforcements stated below shall be practiced in case of
violation of this obligation:

(a) After violation, BAN shall be warned and asked for taking necessary measures.

(b) In case of not taking necessary measures or proceeding or repetition of the

violation, license and investment applications via this BAN is not received for 2 months,
while the obligations of the BAN are covered.

(c) After 2 months, the accreditation of the BAN may be terminated by the
Undersecretariat, in case of not taking necessary measures or proceeding or repetition of the
violation regarding privacy.

Accreditation protocol

Article 38–(1) The Undersecretariat shall sign a protocol, which is prepared in line
with the provisions of the BAC legislation and indicates the mutual duties and obligations
among the parties, with the BA Networks. In case of determination of the acts of infringement
of this protocol by the Undersecretariat, the protocol cease to be in force and the accreditation
could be canceled.

Cancellation of accreditation

Article 39–(Amendment, O.G. December 24, 2014-29215)

(1) The terms and condition of cancellation of protocol and sanctions is predetermined
in the accreditation protocol. In case of detection of transactions during the monitoring and
auditing processes under the Article 45 and 46 contrary to BAC legislation and the Protocols,
the Undersecretariat asks the correction of the transactions. The Accreditation can be canceled
if the correction request is not met in the given time period or upon execution of the reasons
stated in the Article 37 (2) (c) of this Regulation with no less than 1 month and more than 3
months according to the nature of the transactions.

The Transactions following the cancellation of accreditation

Article 40–(Amendment, O.G. December 24, 2014-29215)

(1) The investments made through the BA networks before the cancellation date of the
accreditation shall benefit from tax support. However, the requests of BA whose application
reached to the Undersecretariat but not completed due to the cancellation of accreditation will
be completed by the Undersecretariat. After the cancellation of accreditation, the members of
the BAN shall submit their applications via another accredited BAN, in order to benefit tax
support.

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 PART SIX

Reporting and notification

Activity reports

Article 41-(1) During the first two years starting from BA’s partnership to the venture
company and depositing the capital in cash to the partnership’s bank account, the venture
company shall send partnership bank statements and activity report which will be prepared
according to sample in the Appendix 5 showing the progress in the Business plan, completed
investments and other activities to the Undersecretariat by six-month periods. Following the
end of biennium starting from the acquisition of the shares, only the activity reports shall be
sent to the Undersecretariat by the BA annually, until the sales of all the shares of the venture
company, for information purposes. Each recapitalization of the venture company restarts this
biennium. BAs exiting from the venture company by selling shares shall sent the sales report
to the Undersecretariat prepared according to the sample in Appendix 6, in one month at the
latest starting from date of sales. In case of situations contrary to the provisions of this article,
the provisions of the Article 11 paragraph 2 is applied.

Preparation of financial statements

Article 42– (1) Fiscal statements are the statements preparation of which is obligatory
according to Turkish Accounting Standards. In case the venture company is not under
obligation to comply with the Turkish Accounting Standards specified by the Public
Oversight Accounting and Auditing Standards Authority, fiscal statements are prepared in
compliance to the regulations of Ministry of Finance. The Undersecretariat is authorized to
request the fiscal statements of the venture company, if deemed necessary.

Notification of special circumstances

Article 43–(1) Cases like amendments in the articles of association before the
registration and issues having importance such as bankruptcy shall be notified to the
Undersecretariat by BA in one month at the latest starting from the arising of the case.
Reports related to tax audits shall be notified to the Undersecretariat by BA in one month at
the latest starting from the notification of the report to the taxpayer. In case of bankruptcy of
the venture company by BA before the sales of all the shares of the company, BAs shall send
the statement of proceedings prepared according to the sample on Appendix 7 to the
Undersecretariat in one month at the latest before the beginning of the process of bankruptcy.
In case of situations contrary to the provisions of this article, the provisions of the Article 11
paragraph 2 is applied.

Preparation of statistical information

Article 44–(1) Undersecretariat shall request statistical information from venture

companies and accredited Angel Investors Networks. Undersecretariat can publish
consolidated statistical information related to BAC by six-month or one-year period.

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 PART SEVEN

Supervision and monitoring

Supervision activities

Article 45–(1) Supervision activities include controlling activities which will be

performed continuously by the Undersecretariat on BAs, accredited BA networks, BA
partnerships and venture companies to incline the venture companies comply with the
regulations relating to the business plan, share rates and partnerships to be invested in.

Monitoring activities, monitoring authority and reporting

Article 46–(1) Board is authorized to monitor BAs, BA partnerships, accredited BA

networks and venture companies on behalf of Undersecretariat.

(2) Monitoring activities refers to the audit activities by the Board based on the sample
prepared by taking into consideration the risk assessment of the areas which are determined
by the Undersecretariat on BAs, BA partnerships, accredited BA networks and venture
companies in the BAC.

(3) Board carries out its audit activities according to yearly plan. BAs, BA
Partnerships, BA networks and venture companies shall present all information and
documents requested by the Undersecretariat and Board in the forms and on time as wet
signed and/or on electronic environment. Board prepares its reports in line with the
international audit standards.

PART EIGHT

Other and last provisions

Durations and notification

Article 47–(1) Unless otherwise stated, the durations mentioned in this regulation
starts with the exit date of the documents from or the entrance date of the documents to the
Undersecretariat. All applications to the Undersecretariat shall be replied with an official
letter and electronic platforms or only in electronic platforms in one month at the latest.
Notifications to BAs, BA networks, entrepreneurs and venture companies may be with an
official letter and in electronic platforms or only in electronic platforms.

Information system

Article 48–(Amendment, O.G. December 24, 2014-29215)

(1) For the applications put into process by the Undersecretariat, the documents
requested by the Undersecretariat shall be entered to the information system by BA or BA
network in the electronic environment. All kind of reports, notifications and documents shall
be entered to the information system in the electronic environment by the venture company or

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BA, as well. Original documents or the copies of the original documents in cases where the
Undersecretariat accepts the copies shall be sent to the Undersecretariat.

Operationalization of the accredited BA networks

Provisional Article 1–(1) Applications for BA License, taking the tax support
regarding BAC investments and notifications for BA partnerships shall be made directly to
the Undersecretariat by the BA until December 31, 2013.

Effect

Article 49–(1) The Decree shall come into force on the date of publication.

Execution

Article 50–(1) The Decree shall be executed by the Minister in charge of the
Undersecretariat.

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