Venture Capital and Private Equity Investment Models in CMB Regulations.

Slides:



Advertisements
Similar presentations
Dividend and Interest 7 June Dividend and InterestPage 2 Article 10 of the UN MC – A snapshot  Article 10(1) – Distributive Rule  Article 10(2)
Advertisements

TAXATION TAXATION OF INDIVIDUALS IN THE CZECH REPUBLIC.
1 SIICs and OPCIs Listed and unlisted real estate investment schemes in France Marc Cretté FIDAL.
ROPES & GRAY LLP Private Equity Tax Practices
TAX ISSUES FOR INVESTORS & TRADERS Stacy A. Sand, CPA TAX (8829)
Real Estate Investments in Italy made by foreign investors: FOREIGN COUNTRY  Direct investment Investment through Italian Real Estate Investment Fund.
1 FOREIGN INVESTMENT IN CUBA Republic of Slovenia October 15, 2013.
Ministry of Economy and Finance Public Revenues and Taxes Department Main features of the new Income Tax Law December 2009.
INVESTMENT IN MACEDONIA The economic and tax environment 2007.
Leading Tax Advice in Cyprus... and across the World Cross Border transactions via Cyprus Case analysis Prague, 17 th June 2010.
Securities Firms (I) (ch21) – Fin Securities Firms (I) – Investment Funds Security Firm Overview Mutual Funds Overview Funds Types Fee Structure.
Mutual Funds Portfolio of assets. Mutual Funds and Relatives Open end Closed end ETF Money market funds REIT UITs Hedge funds Managed money.
Business Organizations
Chapter 20 Ownership Structures for Financing and Holding Real Estate © OnCourse Learning.
Chapter 16 Federal Taxation and Real Estate Finance © OnCourse Learning.
Maximising tax efficiency 22 November 2006 Eleanor Watts.
1 Investment Companies Chapter 3 Jones, Investments: Analysis and Management.
Definition and Types of Banks
Investment Options.
Real Estate Investment Chapter 9 Business Organizations © 2011 Cengage Learning.
American Citizens Abroad Town Hall Seminar Daniel Hyde 23 September 2013.
Mutual Funds The Basics. What is a Mutual Fund?  Mutual funds are investment avenues that pool the money of several investors to invest in financial.
9-1 Non-Corporate Forms of Business  Sole Proprietorship  Partnership  LLC  S corporation.
Overview of Finance. Financial Management n The maintenance and creation of economic value or wealth.
Chapter McGraw-Hill/Irwin Copyright © 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Review of Accounting 2.
 Business is owned and run by one individual  Nearly 76% of all businesses  Owner receives all of its profits and bear all of its losses.
Johan Boersma TAXATION OF INDIVIDUALS IN THE CZECH REPUBLIC.
© 2005 Clancy & Company LLP All rights reserved Purpose of Seminar Outline  Outline Structure  Showcase performance of previous Funds  Give status.
1 Belgium-China income tax treaty Marc De Mil Fiscal Department for Foreign Investments Federal Public Service Finance.
MEXICO´s INCENTIVES FOR REAL ESTATE INVESTMENT October 20, 2007 Course Number MUNOZ MANZO y BELAUNZARAN, S. C. SPEAKER ALEJO MUNOZ.
TAXATION TAXATION OF INDIVIDUALS IN THE CZECH REPUBLIC.
1 Taxation of Inbound Transactions Recall definition of an inbound transaction Two taxing regimes: Passive investment income 30% tax on gross income (many.
Indirect Investing.
© 2005 The McGraw-Hill Companies, Inc., All Rights Reserved McGraw-Hill/Irwin Slide 1 CHAPTER TWENTY-ONE REAL ESTATE INVESTMENT TRUSTS (REITS)
American Citizens Abroad Town Hall Seminar Daniel Hyde 14 May 2013.
Michael C. Phiri Legal Officer Securities & Exchange Commission.
Organization and Operation of Corporations CHAPTER 10 Electronic Presentations in Microsoft® PowerPoint®
IMPROPERLY ACCUMULATED EARNINGS TAX (IAET) RA 8424 / RR
Prentice Hall © PowerPoint Slides to accompany The Legal Environment of Business and Online Commerce 5E, by Henry R. Cheeseman Chapter 27 Investor.
©2007, The McGraw-Hill Companies, All Rights Reserved 17-1 McGraw-Hill/Irwin Chapter Seventeen Mutual Funds.
Indirect Investing Chapter 3
1 Chapter 9: Partnership Formation and Operation.
Corporate and Tax Specialist Group Overview to Portuguese Holding Companies Hong Kong, 4 October 2008.
Horlings is a world-wide network of independent accountants and consultants firms 6 February 2009 The Dutch co-operative Nexia European Tax Group Meeting.
McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 7 Chapter 7 Distributions to.
FINAL ACCOUNTS  All companies or corporations ( businesses owned by shareholders) must provide a set of final accounts consisting on three statements:
MORE FACTS ABOUT INVESTING PERSONAL FINANCE. EMERGENCY FUNDS  An ___________account needs to have a high degree of _______ and __________.  High safety.
U.S. Taxation of Foreign Investments November 13 th, 2014.
Mutual Funds and Other Investment Companies Chapter 4 Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin.
VALUATION OF SHARES AND DEBENTURE. NEED OR PURPOSE  When two or more companies amalgamate or one company absorb another company.  When a company has.
Law No. 91 of the year 2005 promulgating the Income Tax Law Salaries And The Like.
Personal Holding Company Chapter 45 Tools & Techniques of Estate Planning Copyright 2011, The National Underwriter Company1 A personal holding company.
Ch. 3 Financial Statements, Cash Flows and Taxes.
Chapter – 3 setoff and carry forward of losses
Private Placements and Venture Capital Chapter 28 Tools & Techniques of Investment Planning Copyright 2007, The National Underwriter Company1 What is it?
McGraw-Hill/Irwin Copyright (c) 2002 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Chapter 11 Dispositions of.
1 M O N T E N E G R O Negotiating Team for the Accession of Montenegro to the European Union Working Group for Chapter 9 – Financial Services Bilateral.
3-1 Chapter 3 Charles P. Jones, Investments: Analysis and Management, Tenth Edition, John Wiley & Sons Prepared by G.D. Koppenhaver, Iowa State University.
Presented By: Andrea Lewis- Jones. OUTLINE Background Key Aspects of the CIS Regulatory Framework Filing Requirements Publication Requirements New Publication.
McGraw-Hill/Irwin Copyright (c) 2003 by the McGraw-Hill Companies Inc Principles of Taxation: Advanced Strategies Chapter 11 Dispositions of Equity Interests.
Copyright(c) 2012 Dr. Chase C. Rhee
ISSUES IN INDIAN COMMERCE
Distributions to Business Owners
Cleary / Jones Investments: Analysis and Management
Chapter 3 Jones, Investments: Analysis and Management
Chapter 7 Investments.
Capital Markets Presentation for Listing and IPO
TAX BENEFITS: Puerto Rico’s strategic location, status as a US jurisdiction and generous tax incentives make it an ideal base for entities that provide.
Provisions of Turkey Tax Amnesty Law
Indirect Investing Chapter 3
Presentation transcript:

Venture Capital and Private Equity Investment Models in CMB Regulations

 Venture Capital and Private Equity Concepts in CMB Regulations  Investment Company Model  Scope of Activities and Types of Models  Establishment  Conversion to an Investment Company  Sale of Shares and Public Offering  Portfolio Limitations  Portfolio Management and Performance Fee  Fund Model  Scope of Activities and Features of the Model  Establishment  Issue and Sale of Units  Portfolio Management and Performance Fee  Tax Regulations 2 Outline

 No specific distinction between “private equity” and “venture capital” concepts according to CMB regulations. Both terms can be used interchangeably.  These concepts are defined to cover both private equity and venture capital investments, respectively.  Definition of Venture Company in CMB Regulations: 3 Companies (joint stock companies and limited companies) established and operating or to be established in Turkey, carrying a growth potential and in need of resources Venture Company: -  private companies -  publicly held companies (non-traded shares) Venture Company ( portfolio company) concept in CMB Regulations

4 Private Equity and Venture Capital Investments Investments in Venture Companies Indirect Venture Capital Investment Fund Units Collective Investment Funds established abroad Special Purposed Joint Stock Companies established in Turkey Securities of other Venture Capital Investment Companies Direct Shares of Venture Companies Debt Securities of Venture Companies Mezzanine Finance

Venture Capital Investment Company (VCIC) Model 5

PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENT ACTIVITIESINVOLVE in MANAGEMENT of VENTURE COMPANIESINVEST in LIQUID ASSETS- Money market instruments and listed securities PARTNER or FOUNDER of LOCAL and/or FOREIGN ASSET MANAGEMENT COMPANIES (Max. %10) PARTNER OR FOUNDER of LOCAL and/or FOREIGN CONSULTING COMPANIES (Max. 10%) 6 VCIC Activities RENDER MARKET CONSULTING SERVICES in Emerging Companies Market of ISE

1)Public offering model At least 25% of outstanding shares of VCIC shall be sold through public offering and be listed on stock exchange 2)Private offering Sales to qualified investors 7 VCIC TYPES: In terms of public and private offering Qualified Investors : Financial institutions, public administrations and entities, natural persons and legal entities who have individual net worth that exceeds TRY 1 milion and natural persons holding angel investor license.

Establishment of VCIC  Registered capital  Min. paid in/issued capital TRY 20 million (approx. $ 9,25 million)  Min. shareholder’s equity TRY 20 million  Privileged shares regarding management rights  At least one leading shareholder- general partner  Registered capital  Min. paid in/issued capital TRY 5 million (approx. $2,3 million)  Min. shareholder’s equity TRY 5 million  Privileged shares regarding management & dividend righst  No leading shareholder requirement Public Offering Sale to Qualified Investors

Sale of Shares  Prospectus to be approved by CMB  Issue document to be approved by CMB Public Offering Sale to Qualified Investors Establishment Initial Investment Sales to Qualfied Investors Build Porftolio 1 Year 18 Mo

Portolio Limitations  Investments other than PE and VC: Max 49%  Investments in Foreign CIS: Max. 49%  Pledges, mortgages and guarantees given- established on behalf of SME’s in the portfolio: Max 10%  Participation in Management and Advisory Companies: Max 10%  Unlisted shares of publicly held companies Max 25% Public OfferingSale to Qualified Investors  Investments other than PE and VC: Max 49%  Participation in Management and Advisory Companies: Max 10% Basis of the limitations is the total assets reported in audited annual financial reports.

11 Portfolio Management & Performance Fee Base for performance fee calculation Sales profit gained on exits Dividend and interest revenues earned on VC companies Public Offering Sale to Qualified Investors Performance Fee Max. 20%No limit

12 Venture Capital Investment Fund (VCIF) Model

PRIVATE EQUITY AND VENTURE CAPITAL INVESTMENT ACTIVITIES (Min. 80% of Net Asset Value) INVOLVE in MANAGEMENT of VC COMPANIES 13 VCIF Activities INVEST in LIQUID ASSETS- Money market instruments and listed securities  Basis of the limitations is the net assets value as reported in audited annual financial reports.  VC&PE investments are to be valued by independent appraisal firms by the end of each calendar year at minumum.  Net Assets Value is to be notified to qualified investors at least once a year.

Portfolio Man. Co & Venture Capital Portfolio Man. Co Qualified Investors Funds of Funds VCIF Founder, Manager & Fund Investor (General Partner) Fund Investor Venture Company Foreign VC&PE Fund Venture Company Qualified Fund Units VCIF Investment Model

Establishment of the Fund  Fund rules document to be approved by CMB  Authorised Portfolio Depositary to be determined  Min. Fund Commitment (initial closing): TRY 5 million (approx. $ 2,3 million)  Min. amount of TRY 5 million to be invested in eligible assets within portfolio limitations defined in regulations and fund documents  Investor Agreement - including the terms and provisions regarding fund commitment payments, performance fee and regulates matters that are not included in fund rules and issue document Establishment Completing Initial Closing of fund commitments Build Portfolio 1 Year

Sale of Fund Units  Issue document to be approved by CMB  Issuance of Qualified Fund Units Priviledge on dividends and have management rights  Up to 20% of the fund units can be invested by the founder (portfolio management company)  Fund units can be transferred among qualified investors upon approval of the founder Sale to Qualified Investors Establishment Completing Initial Closing of fund commitments Build Portfolio 1 Year

17 Portfolio Management and Performance Fee Base for performance fee calculation Sales profit gained on exits Dividend and interest revenues earned on VC companies No limit imposed on Performance Fee

VCIC’s Statistics Source: Public Disclosure Platform  12 VCICs, # traded on Borsa Istanbul :6 and # sold to qualified investors :2 VCICs as of December 31, 2013 Name of VCICNet Asset ValuePortfolio ValueMarket Cap. % of VC Investments in Portfolio Gözde GSYO A.Ş. TRY USD TRY USD TRY USD ,24 İş GSYO A.Ş. TRY USD TRY USD TRY USD ,12 Rhea GSYO A.Ş. TRY USD TRY USD TRY USD ,00 Egeli & Co. GSYO A.Ş. TRY USD TRY USD TRY USD ,30 Gedik GSYO A.Ş. TRY USD TRY USD ) TRY USD (in transition) Egeli & Co. Tarım GSYO A.Ş. TRY USD TRY USD TRY USD ,42

 Taxation of VCIC’s and VCIF’s: VCICs and VCIFs are exempt from Corporate Tax Corporate Tax exempted incomes of VCIC’s and VCIF’s are subject to 0% witholding tax.  Taxation of VCIC’s and VCIF’s Investors Resident Corporations (including non resident corporate tax payers that have a permanent establishment, such as a branch office, in Turkey) Resident Individuals 19 Tax Regulations for VCIC’s and VCIF’s

 Corporates Sale of listed VCIC shares: Witholding tax rate: 0% No Witholding Tax Sale of VCIC shares are included in corporate tax base Redemption of fund units : witholding tax rate : 0% Capital gain from non-listed VCIC shares held min for 2 years is subject to75% Corporate Tax exempt Dividend income from VCIC shares and VCIF unites are exempt from Corporate Tax   Individuals Dividend income from VCIC shares and VCIF unites : 0% witholding tax Dividend income from VCIC shares and VCIF unites : Half of their gross dividend amounts are exempt from income tax. If the remaining amount exceeds a threshold such amount shall be declared with the annual income tax return. 20 Tax Regulations Cont’d (Back-end incentives)

 Front end incentive regulation was introduced in 2012 to be put into effect by 1/1/2013.  Applicable for resident corporates (including non resident corporate tax payers that have a permanent establishment, such as a branch office, in Turkey) and resident individuals.  Venture Capital Reserve: Individuals and corporate tax payers are allowed to reserve a special fund from their annual income to be invested in VCIC or VCIF, up to 10% of their taxable annual income or corporate tax base of the relevant year AND up to 20% of their equity.  Venture Capital Reserves can be deducted from the corporate or income tax base as long as such investment is actually made in VCIC or VCIF.  Venture capital reserve cannot be used for any other purpose, withdrawn, distributed to shareholders/unitholders.  In case of dispose of the venture capital reserve investment in VCIC or VCIF, such amount shall be reinvested within six months following such disposal. Tax Regulations (Front-end incentive)

 Non-Resident Corporates Sale of listed VCIC shares and dividends from VCIF’s are subject to 0% Witholding tax No further requirement for any filling   Non- Resident Individuals Sale of listed VCIC shares and dividends from VCIF’s are subject to 0% Witholding tax No further requirement for any filling 22 Tax Regulations Cont’d