General Assembly
"What decisions require general assembly approval in Turkish companies?"
Quick Answer
The General Assembly (Genel Kurul) in Joint Stock Companies (Anonim Şirketler) is the supreme decision-making organ where shareholders exercise their rights regarding the company's vital affairs, such as approving financial statements, electing board members, and amending the articles of association.
Structure of Joint Stock Companies in Turkey
Under the Turkish Commercial Code (TCC) No. 6102, a Joint Stock Company (A.Ş.) is defined as a company whose capital is definite and divided into shares, and which is responsible for its debts only with its assets. Shareholders' liability is strictly limited to the capital shares they have committed.
Mandatory Organs of a Joint Stock Company
A Joint Stock Company has two primary and mandatory organs: the Board of Directors (Yönetim Kurulu), which manages and represents the company, and the General Assembly (Genel Kurul), which acts as the supreme request and decision-making body for shareholders.
The General Assembly: Types of Meetings
The General Assembly cannot manage the day-to-day operations of the company; its authority is strictly defined by law and the articles of association. Meetings are categorized into several types:
General Assembly Meeting Types
- Ordinary General Assembly: Must be held within three months following the end of each financial year to discuss financial statements, annual reports, profit distribution, and the discharge of board members.
- Extraordinary General Assembly: Convened whenever required by the company's interests (e.g., urgent capital increases, mergers, or addressing sudden financial distress).
- Special Assembly of Privileged Shareholders: Held when decisions made by the General Assembly affect the special rights of privileged shareholders.
- Electronic General Assembly: TCC allows companies to hold general assembly meetings electronically, enabling shareholders to participate and vote online via the Electronic General Assembly System (EGKS).
Who Can Call the General Assembly?
The authority to call the General Assembly primarily rests with the Board of Directors. However, under specific conditions, other parties may also issue a call:
- Single Shareholder: In single-shareholder companies, the shareholder has full authority to convene and make decisions.
- Minority Shareholders: Shareholders representing at least 10% of the capital (5% in public companies) can request the Board of Directors to convene an extraordinary meeting. If the board refuses, they can apply to the commercial court.
- Liquidators: If the company is in liquidation, liquidators can call the assembly for liquidation-related matters.
Cancellation of General Assembly Resolutions (İptal Davası)
Because decisions in the General Assembly are typically made by majority vote, minority rights can sometimes be jeopardized. The TCC provides a mechanism to challenge and cancel these resolutions to protect shareholders.
| Reasons for Cancellation | Description |
|---|---|
| Contrary to the Law | Resolutions that violate mandatory provisions of the Turkish Commercial Code or other applicable laws. |
| Contrary to the Articles of Association | Resolutions that breach the specific rules set forth in the company's own articles of association. |
| Contrary to Good Faith | Resolutions taken with the intention to harm minority shareholders or that abuse the majority voting power (Objective Good Faith Rule - TMK Art. 2). |
Who Can File an Annulment Lawsuit?
Not everyone can challenge a resolution. According to the law, the following parties have the right to file an annulment lawsuit:
- Shareholders: Provided they attended the meeting, opposed the resolution, and had their opposition recorded in the meeting minutes.
- Unjustly Excluded Shareholders: Shareholders who were not properly invited, not allowed to attend, or whose voting rights were unlawfully restricted.
- Board of Directors: Can file a lawsuit if enforcing the resolution would result in civil or criminal liability.
- Board Members: Individual board members may file if the resolution imposes personal liability on them.
Frequently Asked Questions (FAQ)
Can a Joint Stock Company be established with a single shareholder in Turkey?
Yes. Under the new Turkish Commercial Code (TCC 6102), a joint-stock company (A.Ş.) can be formed with just one real or legal person, abandoning the old requirement of at least five shareholders.
What is the time limit to file an annulment lawsuit against a General Assembly resolution?
An annulment lawsuit must be filed within three months from the date the General Assembly resolution was made.
Sources and References
- Turkish Commercial Code No. 6102 (TTK)
- Turkish Civil Code (TMK)
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