The Regulation pertaining to the Procedures and Principles of General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Trade (the “Regulation”) was published in the Official Gazette dated 28.11.2012 and numbered 28481.
Pursuant to article 2 of the Regulation, the scope of the regulation is set as “the determination of the general assembly meetings of joint stock companies to which the representative of the Ministry (of Customs and Trade) shall attend, the procedures and principles applicable to general assembly meetings of joint stock companies, the duties, authorities and qualifications of the Ministry representative which will be present at the meetings and payments to be made to them, the minimum content of the internal regulation which comprises the rules governing the principles and procedures of the functions of the general assembly of the companies, participation in the general assembly, persons who have deposited shares or share certificates who shall exercise their voting rights and the principles and procedures such deposited persons are bound by and the content of the representation certificate”.
This newsletter article shall assess the procedures and principles applicable to the realization of the general assembly meetings.
Types of Meetings
The Regulation lays out the details governing the general assembly meetings which are regulated in general under the Turkish Commercial Code No. 6102 (“TCC”). Accordingly, ordinary and extraordinary general assembly meetings, as well as the special assembly of privileged shareholders’ meetings, are specified as the relevant meetings to be held within joint stock companies.
Election of company bodies, financial statements, annual activity reports, matters related to profit, acquittal of members of the board of directors and other matters related to the relevant activity term deemed necessary shall be discussed in ordinary general assembly meetings.
Extraordinary general assembly meetings, on the other hand, are the meetings, other than the ordinary meetings, held if necessary and urgent for the company.
In addition to such meetings, in the event there are privileged shares among the shares of the company and an amendment to be made to the articles of association may restrict the rights of the privileged shareholders, the special assembly of privileged shareholders shall convene to approve the relevant amendment resolution. However, in the event that 60% or more of the share capital represented by privileged shares was represented at the relevant general assembly meeting in person by the shareholders or by proxy and the majority gives affirmative votes at the general assembly for the amendment of the articles of association, it is not necessary for a separate special assembly of privileged shareholders’ meeting to be held.
Time of Meeting
Pursuant to Article 7 of the Regulation, the ordinary general assembly meetings shall be held within 3 months as of the end of each account term. Extraordinary general assembly meetings on the other hand are not subject to any time restraints as they are held when deemed necessary.
The special assembly of privileged shareholders’ meetings shall be convened to meet within 1 month as of the date of the resolution, in the event a resolution is adopted for the amendment of the articles of association as explained above. In the event the special assembly of privileged shareholders’ meeting is not held, the general assembly resolution shall be deemed approved.
Place of Meeting
Unless regulated otherwise under the articles of association of the company, the general assembly meetings shall be held within the borders of the territorial unit (i.e. city, municipality, and district) where the company headquarters is located. The possibility of holding the meeting at another place or abroad must be specified as an explicit regulation under the articles of association.
The convocation for the meeting announced should include an accurate and detailed explanation of the meeting place.
Convocation for the Meeting
Those who are authorized to convene the general assembly and the court’s authorization, regulated under various articles of the TCC, are regulated together under the same Article 9 of the Regulation. Subsequent articles of the Regulation cover the convocation procedure, the content of the announcement regarding the convocation of the general assembly and the principles governing meetings that were not convoked.
Accordingly, in principle, the general assembly shall be convoked by the board of directors. In the event there is no board of directors, the board of directors cannot convene or its meeting quorum cannot be met, the general assembly may be convened by any shareholder who obtains the approval from the court pursuant to Article 410 of the TCC.
The shareholders constituting the minority of the company (shareholders holding at least 10% of the company share capital, 5% of publicly offered companies or a smaller percentage if stipulated under the articles of association) may also request the board of directors to convene a meeting of the general assembly. This request shall be made through the notary public and in writing.
Additionally, pursuant to Article 9(5) of the Regulation the trustee, or in the event the company is being liquidated pursuant to Article 9(6), the liquidation officers may convene a meeting of the general assembly.
Pursuant to Article 10 of the Regulation, a meeting of the general assembly shall be convoked at least 2 weeks prior to the meeting date. The dates of announcement and meeting shall not be counted in the calculation of the 2 week period.
Article 11 of the Regulation regulates in detail the content of the announcement whereas Article 12 regulates the general assembly meeting held without convocation. Accordingly, “all shareholders or their proxies may convene as the general assembly without abiding by the convocation procedures, provided that none of them object”.
Participation in the Meeting and Voting Rights in the Meeting
Shareholders or their proxy present on the list of attendants to be prepared by the board of directors may participate in the general assembly. The proxy is not required to be a shareholder and provisions of the articles of association requiring the proxy to be a shareholder are null and void.
Each shareholder has at least one voting right at the general assembly. Notwithstanding, in order for the voting right to be generated, at least one fourth of the share price, or a higher price if stipulated under the articles of association should be paid-in.
Cease of the Requirement That the Ministry Representative be Present
In principle, the requirement to procure the presence of the ministry representative at general assembly meetings is no longer preserved. However, it is required for the ministry representative to be present for the meetings specified below:
All general assembly meetings of companies whose incorporation and amendments to the articles of association are subject to the approval of the Ministry;
The general assembly meetings of other companies whose agenda include any of the following items:
Increase or decrease of the capital;
Adopting or leaving the registered share capital system;
Amendments to the articles of association regarding the increase of the registered capital or the scope of activities;
Merger, spin-off or conversion of type;
General assembly meetings of companies which implement and allow participation in the general assembly meeting via electronic means;
All general assembly meetings to be held abroad;
All special assembly of privileged shareholders’ meetings to be held abroad.
Entry into Force
The provisions of the Regulation shall enter into force on the date of its publication save for Article 19/2(b) which provides that privileged voting rights may not be exercised for the acquittal of the board of directors or for the initiation of a lawsuit to hold the board of directors responsible as well as the provisions governing the requirement of announcements on the website of the company. The relevant articles shall enter into force respectively on 01.07.2013 and 01.10.2013.
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.
Specific Questions relating to this article should be addressed directly to the author.