Turkey: Invitation Of The General Assembly To Convene In Joint Stock Companies

I. INTRODUCTION

General assembly of joint stock companies convene as ordinary and extraordinary in accordance with 409 and following articles of the Turkish Commercial Code No. 6102 ("TCC"). In this respect, as a rule, ordinary general assembly meetings in joint stock companies are held within 3 months from the end of each operating year, however it is also possible to convene extraordinary general assembly meetings in case of necessity.

General assembly meetings can be held by invitation and in certain cases without invitation in accordance with the provisions of the TCC.

II. PROCEDURE OF CONVOKING THE GENERAL ASSEMBLY TO THE MEETING PURSUANT TO THE PROVISIONS OF TCC

General principles regarding invitation of the general assembly to the meeting are regulated under article 410/1 of the TCC, and with the relevant article, the organs and persons authorized to invite the general assembly meeting are; the board of directors and liquidation officers in case of liquidation. However, in cases where the board of directors cannot convene continuously, the meeting quorum is not achieved or does not exist, a single shareholder may convene the general assembly meeting with the permission of the court.

In this respect, the procedure regarding the inviting the general assembly to the meeting are regulated by articles 410, 414-415 of the TCC and articles 10-11 of Regulation on the Procedures and Principles of the General Assembly Meetings of Joint Stock Companies and the Ministry Representatives to Attend These Meetings ("Regulation") and a valid invitation should be prepared as shown in the company's articles of association and announced on the website and the Turkish Trade Registry Gazette ("TTRG") at least two weeks before the meeting date, excluding the announcement and meeting days. The shareholders written in the share ledger and the shareholders who inform the company beforehand by giving share certificates or documents proving their ownership of the shares, should be notified by registered mail with return receipt about the meeting day and the newspapers where the agenda and the announcement are or will be published and in the invitation and announcement, information on which body or by whom the general assembly invitation was made, the time and place of the first meeting and the second meeting in case of failure, and the address where the annual report and financial statements are made available for the examination of the shareholders, if the ordinary general assembly meeting is invited, are included in this invitation. In cases where the general assembly invitation made pursuant to the relevant provisions of the TCC is not duly executed, the cancellation of the general assembly resolutions convened upon this invitation may be brought to discussion.

As explained above, two exceptions have been brought to authorized people; (i) the general assembly meeting can be convened upon the invitation of the single shareholder with the permission of the court in single shareholder joint stock companies where the board of directors cannot meet continuously as per the article 410/2 of the TCC, and (ii) minority shareholders request to invite the general assembly with the permission of the court in certain situations as per article 412 of the TCC.

III. CONDITIONS FOR INVITATION OF THE GENERAL ASSEMBLY MEETING BY THE SINGLE SHAREHOLDER

Pursuant to article 410/2 of the TCC; in cases where the board of directors cannot convene continuously or a sufficient quorum cannot be achieved, the main authority to invite the general assembly of the board of directors has been expanded to the sole shareholder with the permission of the court.

As it can be understood from the wording of the provision, in the event of the abovementioned situations, the sole shareholder will have the right to convoke the invitation. However, it is only possible for a sole shareholder to invite the general assembly to meeting with a court decision. As the court decisions to be taken on this matter are definitive judgments, there is no possibility of applying to legal remedies against these decisions, as is the mentioned in case law.

IV. CONDITIONS FOR INVITATION OF THE GENERAL ASSEMBLY MEETING BY THE MINORITY SHAREHOLDERS

With the TCC, shareholders whom are qualified as "minority" shareholders have been granted the right to ask from the board of directors to invite the general assembly by indicating the based reasons and agenda and the right to ask them to put the issues they want to be resolved on the agenda.

In order for the invitation to be convoked by the minority shareholders being duly appropriate, it must be addressed to the board of directors through a notary public. In case the invitation request is accepted by the board of directors, if the general assembly does not convene within 45 days, the authority to convoke the meeting passes to the minority shareholders.

If the aforementioned invitation request is rejected or a positive response is not given within 7 days, the commercial court in the place where the company headquarters is located may decide to convene the general assembly for a meeting. In these cases, the decision of the court is final.

Following the court's decision, the board of directors must convene the general assembly meeting within 45 days at the latest. If the court has decided to convoke the general assembly in the form of an application, the invitation for the general assembly can be convoked by the minority shareholders.

V. CANCELLATION OF THE GENERAL ASSEMBLY RESOLUTIONS CONCESSED UPON THE INVITATION THAT IS NOT DULY PERFORMED

In the announcements regarding the invitation of the general assembly meeting, the invitation announcements in which the conditions for the announcement in the TCC and the Regulation are missing or not met at all are considered as "unlawful invitation announcements".

Pursuant to article 446 of the TCC; whether or not he was present at the meeting, whether he voted negatively or not; shareholders claiming that the invitation was not duly made and that these violations were effective in the resolution of the general assembly, have the right to file an action for the cancellation. In this context, the effect of not making the invitation duly on whether or not this resolution is taken has been determined as a criterion and is observed in practice. The aforementioned regulation appears as a preventive regulation in the malicious request of the cancellation of the general assembly resolutions, with the effect of the precedent decisions and opinions of the Court of Cassation.

However, even if the content of the invitation is in accordance with the procedure, in cases where this invitation can be considered as an invalid invitation, such as when it is made by unauthorized persons, it is a situation that is declared to result in the non-existence of the general assembly resolution, not the cancellation, in the doctrine and case-law practices.v In the same context, according to another opinion in the doctrine; A decision of non-existence, not cancellation, should be given for the general assembly resolutions taken without being announced in the TTRG or notified to the shareholders written in the share ledger.

VI. CONSEQUENCE

As we have stated, the authority to convoke the general assembly meeting, which is essentially attributed to the board of directors, can be carried out by the sole shareholder or minority shareholders in the cases explained in this article. The purpose of the aforementioned regulations is to prevent the absence of organs within the meaning of Article 530 of the TCC and to create an option for the companies, by ensuring the continuation of the company's operation in cases such as the board of directors cannot convene for any reason, the lack of members or the abuse of certain minority rights, the lack of meeting quorum, the absence of the board of directors due to wholesale resignation or accident.

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