Turkey: Corporate Governance And Information Technology Going Hand-In-Hand: Turkey’s Impressive Example Of Mandatory E-Voting

For investors holding Turkish stocks, having an internet connection can now easily mean being an active shareholder who can participate and vote at annual shareholder meetings literally from anywhere via an electronic platform. While non-listed companies can voluntarily opt for virtual shareholder meetings, companies listed on Borsa Istanbul (formerly known as the Istanbul Stock Exchange) are left without any room for cold feet.

Turkey stands out as the world-wide pioneer requiring listed companies to host annual shareholder meetings by electronic means of communication in addition to simultaneously holding physical meetings, as a hybrid solution, and as of October 2012, brings these meetings to the top of shareholders' fingertips via an award-winning e-meeting platform.

Legal transformation for e-voting framework

It has become evident that high on the government's agenda is to create a giant financial hub out of Istanbul. As an emerging market, creation of sound capital markets with the potential to attract local and foreign investors in return for lower capital costs is Turkey's main motive for transformation. The very recent overhaul of the long-standing Turkish corporate and capital markets legislation is strongly indicative of this motive.

The entering into force of the new Turkish Commercial Code in July 2012, and the new Capital Markets Law in December 2012 were the initial major steps followed by the secondary legislation (i.e.; communiqués) issued by the Capital Markets Board of Turkey which govern almost all aspects of companies listed on Borsa Istanbul. While the legal framework for virtual shareholder meetings were initially introduced by the new Turkish Commercial Code, the actual process was detailed in the Regulation on Electronic General Assembly Meetings of Joint Stock Corporations (Anonim Şirketlerde Elektronik Ortamda Yapılacak Genel Kurullara İlişkin Yönetmelik), and the Communiqué on the Electronic General Assembly Meetings of Joint Stock Corporations (Anonim Şirketlerin Genel Kurullarında Uygulanacak Elektronik Genel Kurul Sistemi Hakkında Tebliğ). Both published in the Turkish Official Gazette in August 2012 and became effective as of October 2012.

In order to overcome the inherent problem of not having effective shareholder participation, the above-mentioned legislation now openly recognizes and supports the main principles of transparency and fairness with extensive disclosure measures and participation safeguards, such as like having virtual meetings. While the extent of compulsory virtual meetings is still being discussed by corporate actors in the E.U. and even in the U.S., the Turkish law-makers did not hesitate to resort to hi-tech options to remove barriers in cross-border voting and to embrace investors globally.

Virtual general assembly meetings not only have the exact legal consequences of a physical meeting, including voting, shareholder communication and proposal submission, but also save attendees the burden of costly and time-consuming travels.

Speaking in numbers

Turkey's reformative approach in rendering e-meetings mandatory is rather impressive. So are the numbers: during the period between October 2012 and January 2014, 13,556 investors electronically participated in annual shareholder e-meetings while the number of shareholders attending in person remained at 6,088. This optimistic picture was maintained during the first quarter of 2014 where 8,902 shareholders electronically attended 143 annual e-meetings, quadrupling the 2,216 physical participants.

The new system seems to encourage and facilitate participation by foreign investors and domestic investors alike. The online participation in the same period covered 11 cities within Turkey and 47 different countries around the world welcoming this new remote corporate e-governance solution.

Required technical infrastructure

The electronic shareholder meeting platform "e-GKS" (elektronik Genel Kurul Sistemi) is provided and administered by the central share depository and registry agency, MKK (Merkezi Kayit Kuruluşu). It is required that real-time streaming from the physical meeting venue is available for online participants. Therefore, technical specifications available at the meeting venue are highly important for the effective functioning of the whole system. An uninterrupted electricity and internet capacity must be available for the use of cameras and other live streaming equipment supported by a strong light source to provide an HD image for attending through a computer or mobile device. In practice, companies tend to host their annual meetings at modern convention centers equipped with the required infrastructure and they run a streaming test prior to the meeting to ensure proper operation. MKK also monitors virtual meetings in order to intervene and provide support services in case of technical problems.

It is also required that companies assign certain personnel to log in, use and monitor the e-GKS platform during meetings. Such personnel must hold the e-GKS license which is granted following the completion of the online study modules provided by MKK.

Disclosure requirements attached to e-meetings

As an extension of the transparency and informed voting principles promoted by the new legislation, it is essential that the meeting and the agenda be announced to shareholders three weeks in advance for listed companies via the e-GKS platform, the company website and the Public Disclosure Platform (KAP) (a web-based platform that allows listed companies to electronically post disclosures in a timely, complete and accurate manner). Listed companies are also required to disclose their financial statements, activity reports and dividend distribution schemes for shareholders' review well in advance of annual meetings.

The e-GKS platform refrains from imposing stringent time restrictions on shareholders' indecisiveness about their preferences for whether to attend a "physical vs. virtual" meeting. Online participants must log into their e-GKS account using their electronic signatures to indicate their preference for electronic participation by 21:00 on the last day prior to the meeting (e.g., by 21:00 on 21 March 2014 for a general assembly to be held on 22 March 2014). Otherwise, only physical attendance will be available.

On the day of the meeting, online participants may attend the meeting until only five minutes before the meeting starts, and they are granted a two-minute period in which to vote on each agenda item. Meeting information and voting reports will be instantly communicated to all online participants via e-GKS. MKK will electronically archive all meeting documents, audio-visual records and voting results.

Award-winning electronic platform

Of noteworthy praise is the fact that the e-GKS platform developed entirely by MKK has been awarded the "Best Use of Online Services" at the 13th annual Financial Sector Technology Awards, organized by Financial Sector Technologies, a leading magazine of the information systems and technology sector. The e-GKS application also received a research and development support award from the Scientific and Technological Research Council of Turkey (TÜBİTAK).

The e-GKS system also brought the previously adopted "share blockage system" to an end. In the "pre-electronic" era, shares were blocked prior to the general assembly meeting in order to keep an accurate but also a "frozen" list of attendees. The electronic list of attendees provided by the new system eliminates this restriction by allowing shareholders freedom to dispose of their shares until midnight on the night before the meeting.

Companies will also be willing to benefit from the perks offered by today's technology. Though not compulsory, non-listed companies may also opt for virtual-only or hybrid (simultaneously physical and virtual) meetings provided that their articles of association have the relevant reference incorporated. For example, KPMG, a non-listed company, was quick to amend its articles of association right after the adoption of the e-meeting system in October 2012 to hold the first virtual shareholder meeting in Turkey which set a good example of effective shareholder participation and corporate governance for its listed and non-listed counterparts. Additionally, the Financial Times refers to the electronic shareholder meeting system "as a coup empowering investors to embrace an activist approach". This premise seems to be supported by the high numbers of online participants that have participated and companies that have benefitted so far from the use of shareholder e-meetings.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions