One of the rules ensuring corporate transparency, as outlined in Article 1524 of the Turkish Commercial Code No. 6102 ("Code"), titled "Website," stipulates that capital companies subject to audits must establish a website and publish company-specific announcements within a designated section of the website within the stipulated time frame.
The first paragraph of Article 1524 of the Code, states that the "Regulation on the Websites to be opened by Capital Companies" ("Regulation"), numbered 28663 and published in the Official Gazette on 31.05.2013, regulates the procedures and guidelines for publishing the announcements required by code and allocating a specific section of the website to information society services.
The issues that are required to be published on the website, as listed in Article 6 of the Regulation titled "Content to be published on the website" must be published on the website within the designated period, unless the legislation specifies a different time frame. Otherwise, they should be published within five days from the date of the transaction or event giving rise to the issue, or from the registration or announcement date if applicable.
In joint stock companies, the ordinary general assembly must be held within three months following the end of each operating cycle. The Code states that the board of directors holds the primary responsibility and authority to call a general assembly. However, in certain situations permitted by the Code, the minority and lone shareholders may call a general assembly through a court order. The procedure for convening the general assembly meeting is governed by Article 414 of the Code, titled "Call Procedure". Within this framework, the general assembly meeting must be convened through an announcement published on the company's website and in the Turkish Trade Registry Journal, as specified in the articles of association. This announcement must be at least two weeks before the meeting date, excluding both the announcement and meeting days. Shareholders listed in the shared ledger and those who have notified their addresses by providing share certificates or documents proving their shareholding to the company in advance shall be notified of the meeting date, agenda, and the newspapers in which the announcement has or will be published, via registered letter with return receipt.
Following the Code, Article 6 of the Regulation specifies that the announcement regarding the convening of the general assembly meeting must be published on the website no later than the date of its publication in the Turkish Trade Registry Gazette. Failure to fulfill the website obligations and make the announcements properly, as stipulated by the Code, not only warrants the annulment of the relevant resolution but also holds the managers and members of the board of directors accountable for negligence, without prejudice to the penal provisions.
In the doctrine, there exist two predominant views regarding the application of paragraph 2 of Article 1524 of the Code in cases where capital companies fail to publish the call for the general assembly meeting on the website. The first perspective asserts that the failure to publish the call announcement on the company's website violates the Code's transparency principle, making Article 1524 paragraph 2 an absolute ground for annulment. Conversely, the other perspective, aligned with the case law, holds that if the failure to publish the call on the website impairs a shareholder's right to exercise their shareholding rights, it constitutes sufficient grounds for annulment, without additional conditions.
Moreover, examining court rulings alongside the obligation outlined in the first paragraph of Article 1524 of the Code, reveals that non-compliance with these obligations not only justifies the annulment of the relevant resolutions but also imposes liability on negligent managers and board members. Establishing a causal link is crucial, as the violation pertains to procedural matters rather than the substance of the general assembly resolution.
Illustrating this, the 11th Civil Chamber of the Court of Cassation dated 16.03.2022 with the decision numbered 2020/7083 M., 2022/2003 D., explicitly states: "The first paragraph of Article 1524 of the Code imposes obligations on specific shareholders to establish a website and allocate a designated section for publishing announcements required by the Code. This obligation is not directly related to the decisions or validity of the general assembly or the board of directors. Considering that some shareholders participated in person while others through proxies in the general assembly decisions under review, it was ruled that the conditions for annulment were not met, as discrepancies arising from improper calls and agenda announcements did not influence the adoption of the general assembly decisions."
Consequently, it is evident that the content on the website primarily pertains to the call for meetings and shareholders' right to obtain information, particularly in the context of annulment of general assembly resolutions. The relevant general assembly decision may be invalidated in cases where the absence of a meeting call on the website contradicts the expectations of a reasonable and honest shareholder in exercising their participation and shareholding rights.1 An illustrative case is the one dated 09.12.2019 numbered 2017/944 M., 2019/1171 D., filed at the Istanbul 12th Commercial Court of First Instance, seeking the annulment of a general assembly resolution. Upon evaluating the claims, objections, and the entire case dossier, it was decided to seek a report from the referees. The referees concluded that: "There is no evidence in the file proving that the call for the general assembly meeting was not announced on the company's website. The absence or incorrectness of the announcement falls under the purview of the call procedure violation. The impact of an unlawful call on the decision serves as grounds for annulment, but it must be demonstrated that the improperly made call influenced the decision. The claimant did not contest being notified of the meeting through other means. Hence, if it is assumed that the call was not published on the website, it merely grants the claimant the right to file a case. The referees further observed that all shares were represented at the general assembly dated 24.08.2017, rendering the claim of a missing website announcement unsuitable for isolating the annulment of decisions. Nevertheless, this issue may constitute a breach of the prohibition of contradictory behavior for the shareholder participating in the meeting."
Moreover, considering that the cancellation or invalidity of general assembly or board of directors resolutions may be warranted if they contravene laws, articles of association, principles of good faith, mandatory provisions, morality or personal rights, either in their occurrence or content, it can be inferred that a resolution, deemed valid in both occurrence and content, may still be subject to the obligation of website publication as mandated by the Code to ensure transparency in companies.
In such cases, even if a definitive invalidity does not arise due to any deficiencies, a form of impending invalidity may still exist. However, since such a state of impending invalidity is not expressly addressed within the scope of the Code, it would be inconsistent with the general principles of the Code to establish a direct correlation between the application of paragraph 2 of Article 1524 of the Code and the validity of the general assembly or the board of directors resolutions.2
Furthermore, when considering the requirement to publish the invitation for the general assembly on the websites of capital companies, it is crucial not to overlook the principle of effect as regulated in subparagraph b of paragraph 1 of Article 446 titled "Persons Who May File an Annulment Action" of the Code. Any incomplete or incorrect announcement of the general assembly meeting is deemed an irregularity under Article 1524 of the Code. However, the impact of this irregularity on the decision-making process is a significant factor when assessing a request for the annulment of the general assembly resolution.
A decision by the Bakırkoy 1st Commercial Court of First Instance dated 01.02.2018 and numbered 2016/734 M., 2018/42 D. concluded: "The principle of effect applies to the failure to announce the meeting on the Respondent company's website as required by the law. Since the Respondent company followed the call procedure mandated by the Code, except for the website announcement, and the shareholders were duly informed about the meeting, the resolutions cannot be annulled due to violation of Article 1524 of the Code."3
As a consequence, capital companies subject to inspection are obligated to establish a website and publish the required content within the specified period, as regulated by Article 1524 of the Code, aimed at ensuring transparency. The items required for publication on the website are governed by the Regulation. Specifically, the announcement for the general assembly meeting must be published on the website no later than its publication date in the Turkish Trade Registry Gazette. Failure to adhere to this obligation constitutes a violation of the Code's transparency principle, leading to the annulment of the relevant decision as stated in the second paragraph of Article 1524.
Upon reviewing case law and doctrine, it becomes apparent that the formulation of the general assembly resolution, rather than its content, is the cause of the website's inability to publish the meeting announcement. Therefore, a causal relationship must be established between the website announcement's absence and the shareholders' inability to exercise their rights, determining whether the general assembly resolution should be annulled. Consequently, the breach of the obligation to publish the meeting announcement on the website serves as grounds for the annulment of the relevant general assembly resolution under Article 1524 of the Code.
Footnotes
1. Invalidity of General Assembly Resolutions of Joint Stock Company, KIRCA İsmail, p.228
2. Invalidity of General Assembly Resolutions of Joint Stock Company, Professor Doctor Erdoğan Moroğlu, Onikilevha Yayınları, Updated and Expanded Eighth Edition, İstanbul 2017, p.376
3. In the same manner, Bakırköy 2nd Commercial Court of First Instance's decision dated 18.04.2018 and numbered 2018/52 M., 2018/390 D.; Istanbul 16th Commercial Court of First Instance's decision dated 30.05.2019 and numbered 2017/324 M., 2019/479 D.; Bursa 3rd Commercial Court of First Instance's decision dated 02.12.2020 and numbered 2019/131 M., 2020/699 D.
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