Shariah Governance Frameworks for Equity Crowdfunding: An Analysis and Proposal (İslam Ekonomisi ve Finansı Dergisi (İEFD))

Summary

• As of August 2025, the Capital Markets Board of Türkiye has officially licensed 18 equity-based crowdfunding platforms.p.5
• The initial legal step for crowdfunding in Türkiye occurred in 2017 through an amendment to Capital Markets Law No. 6362.p.11
• The institutional framework for equity crowdfunding in Türkiye was formally established via a communiqué issued in 2021.p.11
• The BIST Participation Index rules stipulate that interest-bearing debt and interest-generating assets must not exceed 33% of market capitalization.p.25
• Revenue from prohibited non-permissible business activities is capped at 5% of total income under participation index guidelines.p.25
• The academic study was completed with a declared author contribution rate of 100%.p.36

Key insights

1. The absence of formal Shariah governance in equity crowdfunding creates major vulnerabilities, including trust erosion, legal ambiguity, inadequate due diligence, and systemic risk.p.2
2. The paper formulates three practical governance frameworks: the Two-Tier Shariah Governance Model, the Hybrid Model, and the Outsourced Shariah Governance Model.p.2
3. The Two-Tier Shariah Governance Model combines a central authority setting overarching standards with institutional advisory committees managing operational compliance.p.21
4. The Hybrid Model establishes an Islamic window within existing platforms, requiring entrepreneurs to provide semi-annual compliance reports.p.24
5. The Outsourced Shariah Governance Model standardizes third-party compliance verification by external fiqhi advisory firms without imposing internal administrative burdens on platforms.p.27
6. Provisional financial tolerance ratios used in participation stock indices are criticized by industry stakeholders for lacking robust foundational alignment with strict Islamic principles.p.25