It is common knowledge that the New Turkish Commercial Code ("New TCC") will bring many novelties as of July 1st, 2012. Although long debated and still reportedly anticipated as a partial amendment, it is believed that many innovations such as electronic general assemblies will facilitate Turkish business world to an easier and more comfortable method of communicating.
In all likelihood, an electronic assembly would, in the first place, recall a general assembly of a joint-stock company's shareholders. However, the New TCC provides the rules not only for such assemblies (shareholders' meetings), but also for those of the Board of Directors in joint-stock companies and Managers in limited companies.
The precondition for convening the above mentioned assemblies on-line is the determination of a provision in the company's by-laws in this respect.
The new TCC does not require the "physical presence" of director/managers in the virtual assemblies. According to the new legal procedure, assemblies can be convened wholly in an virtual environment or such assemblies can be convened by some of the directors/managers and others can join virtually. In such cases, rules for meetings and decision quorums required by laws or the company's by-laws would be applied without change.
The first requirement enabling any shareholder/director/manager to use her/his vote electronically is for the company to maintain a web-site with the facility for electronic use. Other conditions include submitting a request in this respect1 and a technical report proving the adequacy of the electronic environment for efficient involvement. This report has to be registered and published. In addition, the identities of the voters have to be stored. The company's management, which is the Board of Directors in joint-stock companies, and the managers in limited companies, are responsible for meeting these conditions.
The New TCC requires the publication of a Special Communiqué for general assemblies of joint-stock companies in an electronic environment ("Communiqué"). The draft was published by Turkish Ministry of Customs & Commerce within the first half of May 2012 for discussion. As already provided in the New TCC, the text of the provision of enabling the joint-stock companies to convene their shareholders in an electronic environment is envisaged in the draft communiqué, which will be adopted by the joint-stock companies within their bylaws without any amendment.
Shareholder's rights in general assemblies held in an electronic environment, such as participation, suggestion of proposals, expression of views, and voting will have the same effect as if they have been physically present.
When the draft Communiqué enters into force, participation in the general assemblies in an electronic environment and the application of the electronic voting system will be mandatory for the listed companies.
Companies applying virtual attendance and voting in their general assemblies have to comply with the following rules:
- An Electronic General Assembly System has to be established, which is an electronic/virtual platform to be maintained by the Central Office of Records ("MKK") for the listed companies. Other companies not listed wanting to use an electronic/virtual platform, should establish such a system on their web-sites using their own resources or acquire assistance from a third party specialising in such services.
- Since any transaction to be conducted via the Electronic General Assembly System has to bear a secure electronic signature, such signature has to obtained in accordance with the requirements provided by the New TCC;
- The New TCC enables the parties to issue, send, and object to notices, notifications, objections,and similar acknowledgements; invoices, confirmation letters, subscriptions, undertakings, assembly calls, electronic transmission and electronic escrow agreements electronically unless there is another written agreement between the parties. Since the method to be used to transmit these acknowledgements would be recorded in an electronic mail address system, an electronic mail address account has to be opened by companies wanting to use the Electronic General Assembly System. This has to be in compliance with the terms and conditions of the Regulation issued by Turkish Information Technology & Communication Institution on August 25, 2011;
- The Electronic General Assembly System's compliance has to be approved by the Turkish Ministry of Customs & Commerce, which is required to be published and registered according to the rules and procedures determined in the Communiqué;
- Mandatory proxy/ies who will attend the general assembly have to be indentified;
- All the transactions done in the Electronic General Assembly System, identities of the shareholders and its/their proxy/ies who attended the General Assembly electronically have to be recorded in an electronic environment for 10 years. The confidentiality and completeness has to be maintained by the company, which will be done by the Central Office of Records for the listed companies;
- The listed companies have to add image and voice transmission to the Electronic General Assembly System either by themselves or their intermediaries whereas they will have to comply with the provisions of the communiqué to be issued by the Turkish Ministry of Customs & Commerce in this regard;
- Should the companies obtain support services from third parties instead of establishing the Electronic General Assembly System themselves the mentioned third parties have to establish such system in accordance with the same rules provided by the Communiqué. The responsibility of companies and service providers for any damages caused due to reasons attributable to the Electronic General Assembly System will be determined according to general rules.
The Draft Communiqué does not cover the directors and managers' assemblies. Turkish Ministry of Customs & Commerce will issue a separate regulation for that purpose.
Although many Turkish multinational companies already use image and voice transmission tools while holding a directors' or shareholders' meeting, time will be needed to establish the most secure system. Without any doubt, it will be an attractive system especially to enable minorities to have a say in most giant corporate bodies and to be involved in the management of the company in which they are trading, in an era where electronic commerce and trading has developed so rapidly. There is no reservation that shareholders' loyalty can be improved that way too.
However, the bigger question is to determine whether Turkish business mind is open to this method which in Europe and United States has proven so successful. Europe has desisted to obtain a "wet signature" a few years ago, and United States votes can be used even by phone. Turkish business have come a long way since agreements were reached by having tea together and with the current economic growth of Turkey, measures are needed to bring our practices in line with that of the rest of the world.
1 Although the New TCC refers to the "shareholder" who is required to submit such request, we believe that the person who should be responsible for proposing the directors/managers assembly electronically should have been referred to, since the shareholder would not be in a position to know when the directors/managers would convene, and moreover this is not the duty of the shareholder whatsoever.
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