CONFLICT OF INTEREST POLICY
1- Purpose
The purpose of this Policy is to identify situations that may lead to potential conflicts of interest by preventing professional ethical rules and principles from being violated in all activities of Startupfon Crowdfunding Platform Inc. and to regulate the principles and rules related to avoiding or disclosing these conflicts of interest.
2- Scope
This Policy identifies situations and interests that may create a conflict of interest on behalf of the Platform and one or more persons that it serves (members who are investors on the Platform and project owners and venture companies seeking funding through the Platform). This conflict of interest situation may arise between individuals served and themselves, their partners, employees, managers, and those directly or indirectly related to them, and the individuals served. The Conflict of Interest Policy applies without exception to all employees of the Platform.
This Policy includes matters that may lead to a conflict of interest arising from activities conducted on behalf of the Platform, the measures taken to prevent/detect possible conflicts of interest, and the procedures to be followed in cases where they cannot be prevented/detected.
3- Responsibility
This policy enters into force with the decision of the Board of Directors, and all changes to be made on it are approved by the Board of Directors.
The Internal Control Department and the General Manager are responsible for the implementation of this policy.
Members of the investment committee cannot obtain any economic benefit from entrepreneurs or venture companies and cannot provide more than 5% of the targeted fund amount for the campaigns they evaluate. Additionally, they cannot participate in negotiations regarding the evaluation of campaign applications related to projects with which they, their spouses, or their direct and indirect relatives are directly or indirectly related, nor can they vote.
4- Definitions
Venture Company: Companies that will continue to operate without the obligation to establish a joint stock company, and are limited liability companies that are required to convert into a joint stock company prior to transferring the funds collected to the escrow agent, which has developmental potential and needs funding for their projects and are established in Turkey.
Entrepreneur: Real persons and legal entities residing in Turkey seeking funding through crowdfunding based on equity and/or debt.
Platform: The organization that mediates crowdfunding based on equity and/or debt and provides services in electronic environments.
Crowdfunding: Collecting money from the public through platforms, aiming to provide the necessary funding for the project, without being subject to the provisions of the Law on investor compensation, in accordance with the principles set by the Board.
Board: Capital Markets Board.
Company: Startupfon Crowdfunding Platform Inc.
Notification: Capital Markets Board Crowdfunding Regulation (III-35/A.2).
Member: An investor who meets the membership conditions and enters into a membership agreement with the platform.
Board of Directors: Company Board of Directors.
5- Implementation
Typical examples of conflicts of interest that may arise during the crowdfunding services provided by the Company are listed below:
Receiving commission, discount, or similar benefits from any entrepreneur or member due to a transaction made within the crowdfunding services.
Engaging in transactions that may result in outcomes favouring one or more members over others.
Using information obtained in the context of crowdfunding services for the benefit of themselves or a third party.
Using research results that will be announced to members in written, printed, or verbal form and that may affect investment decisions for the benefit of personnel or third parties before being announced to members.
Providing any personal benefit to themselves or their relatives while using the Company's resources.
Accepting a gift from an entrepreneur that may affect the independence and integrity of the Company or employees.
Managers participating in the boards and/or committees of venture companies during the campaign period.
Employees who possess internal information sharing this data with third parties before publicly disclosing them in compliance with the regulations.
5.1 - Professional Ethical Rules
These are a set of professional rules that obligate the employees of the Platform and third-party employees involved in the relationship to perform their duties and professions to the best of their abilities while adhering to specific rules and providing moral guidance, regulating professional competition, and aiming to preserve service ideals.
5.2 - Ethical Principles
Platform employees and third-party employees involved in their work act independently, honestly, fairly, competently, diligently, based on up-to-date information, respectfully, and ethically in their relationships with the public, individuals served, their employers, colleagues, and other capital market participants. They maintain the work order by adhering to the following fundamental ethical rules:
Independence, Honesty, and Fairness
Diligence and Care
Continuous Development and Updating Professional Knowledge
Confidentiality
Ethical Thinking
5.3 - Codes of Conduct
All employees of the Platform must fully comply with the following codes of conduct in all activities and service types. The matter of ensuring an operation that complies with the codes of conduct should be monitored not only by managers and senior executives but also by all personnel in the organization. In case of any violations of the codes of conduct, this must be reported to the Internal Control Department as soon as possible. These rules are as follows;
Professional Expertise Rule: Independence and neutrality, not making false declarations, knowledge of regulations, avoiding behaviour inconsistent with professional expertise.
Ensuring Honest Operations: Avoiding actions that will disrupt investment, market fraud, and misuse of internal information.
Responsibilities to Individuals Served: Loyalty, prudence, and diligence, acting fairly, behaving in accordance with the information, risk, and investment preferences of the member, providing clear and accurate performance presentations, maintaining confidentiality.
Responsibilities to Employers: Personal work, diligence, and loyalty, compliance with regulations and instructions, responsibilities of managers.
Conflict of Interest: Disclosure of conflicts of interest, prioritizing transactions.
Responsibility to the Platform: Avoiding all behaviours that may tarnish the sense of trust and reputation.
Platform personnel, when in doubt about the compliance of any behaviour with ethical principles and codes of conduct, shall report this issue to their superior for evaluation. In situations requiring quick decision-making, they may exercise their own ethical judgment, provided that they inform their manager as soon as possible.
Platform personnel are required to constantly update their professional knowledge and regulatory knowledge, knowing that the ethical principles and codes of conduct will not be limited to the provisions in the regulations (even if based on concrete examples), and that the scope of the Notification may always expand. In this context, they must act in accordance with all capital market legislation provisions that may apply to them, in a manner that will guide them beyond the Notification.
In addition to the main services to be provided by the Platform, professional ethical principles and codes of conduct shall unreservedly apply to ancillary services and all other activities provided in compliance with the regulations.
Individuals cannot use the Company’s name and reputation for personal gain.
Platform personnel, even when having operational employees who provide direct services to those served or are not specialists, are obliged to comply with professional rules. In case of failure to comply with these rules, the Company may terminate the employment of the Platform personnel.
5.4 - Conflict of Interest and Disclosure of Conflicts of Interest
During the performance of the Platform's funding and campaign activities and services; conflicts of interest that may arise between the individuals served and themselves, their partners, employees, managers, and those directly or indirectly related to them, and between an individual served and another individual served fall under the definition of conflict of interest included in this Policy.
Any situation that may be against the interests of individuals served or may cause damage is defined as a conflict of interest.
Gaining material benefits at the expense of harming the interests of the service recipient or preventing financial loss.
Providing benefits as a result of favouring one service recipient or group of service recipients over another.
Subjecting the service recipient to higher transaction costs than the market due to obtaining services from a company or group of companies in which the Platform has a conflict of interest.
Gaining financial benefits from someone other than the service recipient as a result of the services and activities provided to the service recipient beyond standard fees and commissions.
Gaining benefits from the services and activities offered to the service recipient, even though it does not serve their interests.
In addition to fundamental elements that do not constitute a conflict of interest, Platform personnel shall act appropriately in any other situation that may lead to a conflict of interest as per the principles included in the conflict resolution section.
5.5 - Material and Non-Material Conflicts of Interest
A material conflict of interest includes a real or potential financial gain. This financial gain does not necessarily have to be monetary. Gains such as gifts and creams also fall within this scope. In non-material conflicts of interest, although there is no financial gain, there may be other personal interests involved. Influencing trade, reputation, and establishment of connections will be included in this.
5.6 - Prohibition of Accepting Gifts and Distributions to be Given
Platform personnel cannot use their positions and authorities at the Platform for personal and private gain for themselves, their families, or third parties in any way. Personnel cannot request or accept valuable items/gifts from other employees, individuals served, vendors, and persons legal entities with whom they have corporate business relations that may harm their professional decisions or may cause damage. They cannot engage in behaviours that imply this meaning. Platform employees cannot enter into debt relationships with individuals served.
5.7 - Avoiding Conflicts of Interest
Considering the types of services, the individuals served, and the external services that Platforms receive, there is a high probability of conflicts of interest arising. Legal regulations in this regard provide explanations for measures to be taken to avoid conflicts of interest and the path to be followed should a conflict of interest arise.
Managers and personnel of the Platform must avoid conflicts of interest that may arise during their activities, not give rise to interventions affecting their integrity and neutrality, and also avoid business and processes that may affect their integrity.
The management of the Platform is obliged to take all necessary measures aimed at ensuring the reliability, transparency, effectiveness, stability, fairness, and competitiveness of the capital markets concerning the regulations. All personnel of the Platform must be aware of the conflicts that may arise between the individuals served and their employers, mitigate these situations if possible, and in cases where it is not possible to do so, they are expected to explain these situations understandably and understandably to both the Platform management and the individuals served. Personnel fulfilling their obligations will provide the essential information and support for the correct decision-making of the individuals served and the employers. In cases of direct conflicts of interest as specified in this Policy document, adherence to the Policy provisions must be maintained without the need for interpretation. The Platform shall show the necessary care and diligence to manage and resolve conflicts of interest fairly.
5.8 - Disclosure of Conflicts of Interest
While carrying out crowdfunding activities, any potential issue that may cast a shadow on the independence and neutrality of any Platform employee or negatively affect their duties must be reported in a clear, noticeable, comprehensible, and effective manner to the individuals served and the Platform management. Personnel making this notification convey it reasonably to the other party in a straightforward and clear manner.
If it is determined that it is not possible to prevent a conflict of interest due to reasonable causes arising from the operation of the market, the Platform must inform the individuals served about the content and reasons for the potential conflicts of interest that may arise between itself and the individuals served before providing the relevant activity or service. Per legal regulations, the burden of proof regarding that the relevant notification has been made lies with the Platform.
These disclosures regarding conflicts of interest cannot be used in a manner that will lead to illegal work and transactions.
The burden of proof regarding that these disclosures have been made lies with the Platform.
5.9 - Policies on Conflicts of Interest and Prevention of Conflicts of Interest
In formulating the conflict of interest policy, the Platform considered the number of personnel, the organizational structure, and the services and operations it provides. The principle of separation of duties was emphasized as one of the elements preventing conflicts of interest. In this Policy document, the Platform acts in a way that provides measures and security regarding the definitions of duties and workflows, focusing on access to information and documents.
5.9.1 - Confidentiality Obligation
This obligation is especially stated to continue even after the personnel have left the job. The confidentiality obligation encompasses all employees, including those managers who can access information and documents due to their duties.
The obligation of confidentiality covers not only Platform information but also the information concerning the individuals served. It is prohibited to provide reports and/or information to members, even for informational purposes, regarding a project that has not been disclosed for funding. Information regarding projects that have been evaluated but not accepted for funding at the Platform will also be regarded within this scope.
All information belonging to the Platform is subject to confidentiality principles, and the transfer and trading of this information to third parties is prohibited. Specific trade secrets of the Platform, financial information, employee information, and all information obtained during the duration of employment; information about individuals served, computer and telecommunication systems, and all work, agreements, and developed products carried out by the employees during their tenure are confidential.
Employees are aware that making direct or indirect purchases and selling based on any confidential/internal information of the Company, including obtaining benefits for themselves or another, constitutes a violation and do not attempt such transactions.
It is fundamental that all personnel do not use the Platform’s equipment, systems, or email system to prepare, store, or send personal and private information. However, those who use it, will be deemed to have waived the confidentiality of their personal information.
5.9.2 - Measures to Prevent Conflicts of Interest
It will not be possible for personnel with organic ties to other platforms and workers to access information that falls under the scope of conflict of interest regarding the services provided by the Platform. Similarly, the sharing of this information cannot occur. Reports shared with authorized persons and partners due to legal obligations will not fall within this scope.
For every personnel working within the Platform, access to certain software with personal passwords and user codes is granted, taking their duty scope and professional qualifications into consideration. Preventive measures are taken to restrict access to financial statements, valuations, internal information, reports, lists, the existence of individuals served, transactions, contact information, which fall outside the personnel’s job definition and authority. The primary of these preventive measures includes differentiating duties on a personnel basis and separating authority into levels, based on cross-control principle. Workflows are structured to support these measures to prevent conflicts of interest to be carried out electronically. The Platform is obliged to control the records of user logs during its internal audit, whether they are periodic and associated with certain periods or not.
At the Platform’s headquarters, an infrastructure, equipment, and physical space arrangement that maintains confidentiality will be established to the extent required by the nature of the work in electronic environments and/or verbal communication. This situation must be taken into account in the seating arrangement of departments with complementary duties and information that can be related to conflicts of interest. Equivalent precautions are taken regarding access to physical documentation and archiving processes concerning documents.
Including the avoidance of conflicts of interest; policies, practices, sanctions, ethical behaviours, and all arrangements in this direction have an instructive and deterrent effect. Even if the adherence to ethical principles is on a voluntary basis, effective organizational structure and support from senior management for following processes will be the most significant preventive measure.
Another important measure in preventing conflicts of interest will be the practices that increase awareness and provide transparency. In this regard, creating institutional awareness through methods such as access to the policies and procedures regulating internal workflows, and distributing training and policy-related documents to the entire organization is essential.
Challenges in implementing conflict of interest policies lead to the establishment of an open organizational culture based on open communication, allowing for shared interpretations and hesitations, and open discussion of these matters between Platform management and personnel.
5.10 - Recording of Conflicts of Interest
To identify potential conflicts of interest, all conflict of interest records are kept periodically by the Internal Control and Risk Management Unit. Records of conflicts of interest are an essential tool that includes the details of actual and potential conflicts of interest that may arise between the Platform and individuals served or among the individuals served, determining the management of potential conflicts. Recording and evaluating the complaints of individuals served will enhance the quality of the services provided, as well as assist in preventing conflict of interest. The information in the records enables the management of existing and potential conflicts of interest and is kept.
5.11 - Management of Conflicts of Interest
The Platform ensures the continuity of the processes, procedures, and organizational arrangements mentioned below for managing potential conflicts of interest.
The critical arrangements made in accordance with the Platform's conflict of interest management policy are as follows:
All employees of the Platform are responsible for information security and confidentiality, and confidential information can only be shared with authorized authorities with the knowledge of senior management if necessary for the conduct of the work.
All employees are obliged to act in full compliance with the Platform's procedures at all times.
All employees must comply with instructions and guidance regarding managing conflicts of interest.
Measures are taken to prevent or manage the flow of information within the Platform or among the members of the group of companies (Chinese Wall).
Monitoring and supervision of units within the Platform subject to conflicts of interest and the personnel working in these units are ensured.
Measures are created regarding the remuneration of employees working in units subject to conflicts of interest.
Employees of the Platform are assigned in a manner that does not cause conflicts of interest.
All individuals served are treated fairly and equally.
Personnel must inform the Internal Control Department and the General Manager of any potential or actual conflicts of interest or any doubts regarding whether a situation is related to conflict of interest, and provide information about all personal or professional relationships and financial transactions that might create conflict of interest.
5.12 - Resolution of Conflicts of Interest
The Platform accepts the timely resolution of identified conflicts of interest as a principle.
If the investigations carried out do not resolve the conflict of interest, the issue will be forwarded to Senior Management.
The Board of Directors is the final decision-making body in resolving conflicts of interest; actions to be taken as a result of the investigation carried out by senior management and the prepared report will be decided by the Board of Directors.
5.13 - Conflict of Interest Among Served Persons
In cases where conflicts of interest cannot be avoided between individuals served, authorized personnel must treat these individuals fairly.
5.13.1 - Priority of Transactions and Instructions
Platform personnel, in the execution of transactions, primarily give priority to the individuals served, and then to the Platform's business and operations. Every situation that may cause a conflict of interest must be avoided in this regard. Personnel who violate this measure and rule shall be subjected to the provisions of the personnel regulations. At the same time, restrictions shall be imposed on the transaction and instructions of personnel. It is essential that personnel perform their transaction permission in accordance with the principles of professional neutrality and honesty and do not use this permission for gaining benefits from transactions.
5.13.2 - Project Evaluation Reports
It is ensured that project evaluation reports are objective and independent. The information must be presented to the member without being used incorrectly or maliciously. Personnel responsible for preparing, approving, publishing, and/or distributing reports cannot use the contents of these reports to create benefits for themselves or third parties or reduce any incurred damages before announcing them to members.
There should be no pressure regarding unfavorable reports not being made or favorable reports being made on shares where significant members have made high-value investments. All personnel preparing project reports are required to act objectively and impartially during the preparation of the reports, without considering the pressures, prompts, or demands from the management of the Platform, the Platform being prepared, or from the members holding this capital market instrument in their portfolios.
5.13.3 Valuation – Rating – Pricing
In activities of this nature, if the person/Platform providing the service and the person receiving the service payment are the same, there will be a conflict of interest. In activities such as valuation, rating, and pricing; the criteria and measures applied by the Platform for these activities are adhered to, and the principle of neutrality is preserved.
5.14 Informing Members
Should the Company find reasons according to reasonable causes that conflicts of interest cannot be avoided or that organizational and operational conflicts of interest have not adequately prevented, it must inform the members about the content and reasons for potential conflicts of interest that may arise between the Company and the members before providing the relevant activity or service, through verifiable means.
Any relationship and conditions that could affect the objectivity of the comments and recommendations provided during the consulting activity will be explained to the members. This provision also applies to all real or legal persons participating in the preparation of the recommendation, under a contract that will create an employment relationship with the Company or without any contract.
In cases where there are significant financial relationships such as ownership of shares in mutual paid-in capital or voting rights of 1% or more between the entrepreneur and the Company, it is mandatory to disclose information regarding these.
6. Enforcement
The provisions of this Policy have been accepted by the Board of Directors of Startupfon Crowdfunding Platform Inc. on 29/11/2022, and will enter into force on the date of the decision.
