Real Estate Investment Fund

Step-by-Step Process

Investment Steps for Turkish Citizenship via Fund Shares

All steps consisting of 11 sections in applying for citizenship via Real Estate Investment Fund (REIF) or Venture Capital Investment Fund (VCF):

1. 1

   SECTION ONE - LEGAL BASIS OF CITIZENSHIP APPLICATION VIA FUND INVESTMENT

   Acquiring Turkish citizenship via investment is regulated under the Turkish Citizenship Law No. 5901 and the Regulation on the Implementation of the Turkish Citizenship Law. Under Article 20 of the Regulation, foreign nationals who meet certain investment conditions are allowed to acquire Turkish citizenship in an exceptional way.

   One of these investment types is purchasing real estate investment fund or venture capital investment fund shares. Under Article 20/2-e of the Regulation, foreign investors who purchase at least USD 500,000 or equivalent foreign currency of REIF or VCF shares on the condition of holding them for at least three years, and whose status is determined by the Capital Markets Board, can apply for citizenship via investment.

   The authorized institution in this application path is the Capital Markets Board (SPK). For the applicant to proceed to the citizenship process, the investment condition must be determined by the SPK with a certificate of conformity. Without obtaining the certificate of conformity, the investment condition of the citizenship application is not considered completed.

2. 2

   SECTION TWO - WHAT IS A REAL ESTATE INVESTMENT FUND AND VENTURE CAPITAL INVESTMENT FUND?

   A real estate investment fund is a capital market instrument that directs resources collected from investors to real estate, real estate projects, or real estate-backed assets. These funds allow investors to invest indirectly in the real estate market without having to purchase real estate directly.

   A venture capital investment fund is a fund structure that enables investing in startup companies, businesses with growth potential, or companies in need of capital under certain investment strategies. These funds generally target investment areas that carry higher growth potential but also carry higher risks.

   In terms of citizenship applications, the basic requirement in both fund types is that the fund shares meet the minimum amount prescribed in the legislation and are held for at least three years. However, the nature of the fund to be invested in, its liquidity structure, risk profile, fund rules, issuing document, buyback conditions, and the investor's exit opportunities from the fund must be carefully examined before the investment.

   Even if the fund investment is suitable for the citizenship application, the investor's financial goals, risk perception, and the obligation to remain in the investment for three years must be evaluated separately.

3. 3

   SECTION THREE - MINIMUM INVESTMENT AMOUNT

   The minimum investment amount in applying for Turkish citizenship via REIF or VCF shares is USD 500,000 or equivalent foreign currency. This amount must be met at the stage of purchasing the fund shares.

   In determining the investment amount, the foreign currency sale transaction, the Turkish Lira equivalent amount, the purchase of fund shares, and tracking of the shares electronically before the Central Registry Agency (MKK) are evaluated together.

   The value of fund shares may change after the investment depending on market conditions, the value of assets in the fund portfolio, or changes in exchange rates. Provided that the investor does not sell, transfer, or reduce the shares of their own free will, a subsequent decrease in value does not mean that the minimum investment condition is lost in all cases.

   However, the investor selling, transferring, lifting the blockage, or reducing the investment amount on the fund shares at their own request creates a serious risk for the citizenship application. Therefore, the three-year holding requirement and the liquidity characteristics of the investment must be carefully evaluated before making a fund investment.

4. 4

   SECTION FOUR - FOREIGN CURRENCY SALE TRANSACTION AND FUND PURCHASE

   In citizenship applications via fund shares, the relevant foreign currency amount must be sold to a bank operating in Turkey before the transaction and transferred to the Central Bank of the Republic of Turkey by the bank. With the Turkish Lira amount obtained as a result of this transaction, REIF or VCF shares are purchased.

   Therefore, the investor must ensure that the foreign currency sale transaction is carried out in accordance with the rules before the fund purchase. The foreign exchange purchase document, transaction descriptions, passport or foreign identity number information, and transaction amount are important for the application file.

   It may not be possible to withdraw from the transaction or cancel the foreign currency sale after the transaction is completed. Therefore, the investor must clarify the fund selection, investment strategy, legal consequences, and suitability for the citizenship application before performing the currency conversion transaction.

   In the fund purchase process, the bank, investment institution, portfolio management company, Central Registry Agency, and Capital Markets Board processes are interconnected. Therefore, to ensure that the transactions progress without errors, the investment, legal consultancy, and financial consultancy processes must be run in coordination.

5. 5

   SECTION FIVE - MKK RECORD AND CITIZENSHIP BLOCKAGE SUB-ACCOUNT

   In order for REIF or VCF shares to be shown as a basis for the citizenship application, the shares must be tracked electronically before the Central Registry Agency (MKK) and blocked in the citizenship blockage sub-account.

   This blockage is the basic mechanism showing that the investor will hold the shares for at least three years. The blockage transaction is carried out before the MKK through the relevant investment institution. Transferring the shares to the investor account and blocking them within the scope of the citizenship application are among the most important elements of the conformity certificate evaluation.

   The blockage transaction is established at the request of the investor. The investor can lift the blockage of their own free will; however, this may lead to the cancellation of the citizenship application or notifying the relevant institutions that the investment condition has been lost.

   Therefore, the investor must know that no sale, transfer, pledge, attachment, injunction, precautionary attachment, or any transaction that may limit the ownership right on the fund shares should be performed during the three-year period.

6. 6

   SECTION SIX - THREE-YEAR HOLDING REQUIREMENT

   One of the basic requirements of applying for Turkish citizenship via REIF or VCF shares is holding the shares for at least three years. This period is evaluated based on the date when the minimum investment condition is met and the shares are blocked appropriately.

   During the three-year period, the investor should not reduce, sell, transfer, or lift the blockage of the shares shown as the basis for the citizenship application of their own free will. The occurrence of an encumbrance limiting the ownership right on the shares may also create a risk for the application.

   A decrease in the value of the fund due to market conditions, exchange rate changes, or some value movements occurring outside the investor's will within the scope of the fund rules may not automatically mean that the application condition is lost. However, reduction or transfer transactions carried out with the active will of the investor create problems for the application.

   Therefore, the investment must be monitored regularly and the citizenship blockage must be maintained in the MKK records during the three-year period.

7. 7

   SECTION SEVEN - WHAT IS A CONFORMITY CERTIFICATE?

   A conformity certificate is an official document showing that the foreign investor meets the minimum investment requirement sought for the Turkish citizenship application. In citizenship applications via REIF or VCF shares, this document is issued by the Capital Markets Board (SPK).

   The conformity certificate issued by the SPK shows that the applicant has purchased the relevant fund shares in accordance with the amount and period requirements prescribed in the legislation and meets the investment condition basis for the application.

   In this scope, the following points are generally examined in the conformity certificate evaluation:

   • Identity and passport information of the applicant,
   • MKK registry number of the applicant,
   • The type and amount of the purchased REIF or VCF shares,
   • Whether the shares are blocked in the citizenship blockage sub-account,
   • Whether the minimum USD 500,000 equivalent investment condition is met,
   • Whether the currency sale and fund purchase process with Turkish Lira is carried out in accordance with the legislation,
   • Whether the requirement of holding the shares for at least three years is met,
   • Whether there is an encumbrance limiting the ownership right on the shares.

   After the conformity certificate is issued, the applicant can proceed to the short-term residence permit and citizenship application stages.

8. 8

   SECTION EIGHT - DOCUMENTS REQUIRED FOR CONFORMITY CERTIFICATE APPLICATION

   In the conformity certificate application via REIF or VCF shares, the following documents are generally prepared:

   • Copy of the passport of the foreign real person applicant,
   • Application petition containing the applicant's name, surname, birth date, foreign identity number, address, and contact information,
   • MKK registry number of the applicant,
   • Investment information regarding the purchased REIF or VCF shares,
   • Document showing that the shares are blocked in the citizenship blockage sub-account before the MKK,
   • Foreign exchange purchase document if currency sale is performed,
   • Investment institution documents showing the fund purchase transaction and investment amount,
   • Bank and investment institution letters if deemed necessary,
   • Power of attorney containing special authority if the application is to be made through an attorney.

   The applicant's identity information, passport information, MKK registry number, investment amount, fund information, and blockage status must be clearly and consistently included in the documents.

   Missing documents, incorrect transaction descriptions, incompatibility in the MKK record, incorrect establishment of the blockage, or deficiencies in the currency sale process may cause the conformity certificate application to be delayed or rejected.

9. 9

   SECTION NINE - POINTS TO CONSIDER IN FUND SELECTION

   When making a fund investment for citizenship purposes, meeting only the minimum amount is not sufficient. The structure and risk profile of the fund to be invested in must also be carefully examined.

   The following points should be evaluated especially when selecting a fund:

   • Whether the fund is a real estate investment fund or a venture capital investment fund,
   • Whether the fund has a suitable transaction infrastructure for citizenship applications,
   • Whether the fund shares are tracked before the MKK,
   • Whether the fund shares can be taken into the citizenship blockage sub-account,
   • Liquidity conditions of the fund,
   • Buyback and exit conditions of the fund,
   • Risk profile of the fund,
   • Portfolio structure of the fund,
   • Past performance of the fund,
   • Provisions in the fund rules and issuing document,
   • Financial consequences that may arise for the investor during the three-year holding period.

   A fund that is suitable for a citizenship application may not be suitable for the investor's personal risk profile. Therefore, fund selection should be evaluated not only legally but also in terms of financial and investment consultancy.

10. 10

    SECTION TEN - APPLICATION RISKS AND POINTS TO CONSIDER

    One of the most important risks in citizenship applications via REIF or VCF shares is that the fund investment and blockage transactions are performed technically incorrectly. Failure to transfer the shares to the correct account before the MKK, failure to block them in the citizenship blockage sub-account, or the investment amount not meeting the minimum condition can create serious problems for the application.

    Some situations that may create a risk for the application are:

    • The investment amount not meeting the minimum USD 500,000 equivalent,
    • The foreign currency sale transaction not being performed in accordance with the rules,
    • The fund shares being tracked in the wrong account,
    • Failure to create the MKK citizenship blockage sub-account,
    • Selling or transferring the shares before three years expire,
    • Lifting the blockage at the request of the investor,
    • The occurrence of a pledge, attachment, injunction, or similar encumbrance on the shares,
    • The fund selection not being suitable for the investor's risk profile,
    • Absence of the necessary special authorities in the power of attorney,
    • Deficiencies or inconsistencies in personal documents in the citizenship file.

    Therefore, before making a fund investment, both the suitability of the fund for the citizenship application and the personal and financial situation of the investor must be evaluated together.

11. 11

    SECTION ELEVEN - IMPORTANCE OF ATTORNEY SUPPORT

    Applying for Turkish citizenship via REIF or VCF shares is a special type of application where capital markets transactions and citizenship law intersect. Therefore, it is important that the application process is conducted under legal supervision, not only through the investment institution.

    Attorney support is particularly important at the following stages:

    • Evaluation of the applicant's compliance with citizenship conditions,
    • Examination of the suitability of the fund type to be invested in for the application,
    • Evaluation of fund rules, issuing document, and investment conditions,
    • Checking foreign currency sale and exchange purchase document processes,
    • Following up MKK citizenship blockage sub-account transactions,
    • Preparing the conformity certificate application file,
    • Following up the process before the Capital Markets Board,
    • Executing the short-term residence permit application,
    • Preparing the citizenship application file,
    • Including the spouse and children in the scope of the application,
    • Following up the application process before public institutions.

    Incomplete or incorrect transactions may cause the application to be delayed, the conformity certificate to be denied, or the investment condition to be deemed invalid. Therefore, it is recommended to obtain professional legal support from the beginning of the process in applications for Turkish citizenship via fund investment.

LEGAL FRAMEWORK

Legal Basis

• Turkish Citizenship Law No. 5901

  Regulates the acquisition, loss of Turkish citizenship, and the basic procedures and principles regarding citizenship.

• Regulation on the Implementation of the Turkish Citizenship Law

  Regulates the application conditions and procedures regarding the acquisition of Turkish citizenship through investment and in an exceptional way.

• Article 20/2-e of the Regulation on the Implementation of the Turkish Citizenship Law

  Regulation regarding the ability of foreign nationals, whose purchase of real estate investment fund shares or venture capital investment fund shares of at least USD 500,000 or equivalent foreign currency on the condition of holding them for at least three years is determined by the Capital Markets Board, to apply for Turkish citizenship in an exceptional way.

• Capital Markets Legislation

  Holds importance in terms of real estate investment funds, venture capital investment funds, shares, portfolio management, MKK registration, and investor transactions.

• Foreigners and International Protection Law No. 6458

  Holds importance in terms of the short-term residence permit processes of foreign nationals who will apply for citizenship by investment.