Turkey: General Assembly Meeting And Decision Quorums In Non-Public And Public Joint Stock Companies

1. INTRODUCTION

In joint stock companies (in Turkish, "anonim şirket"), shareholders convene and adopt resolutions in the form of a General Assembly. General Assembly can hold ordinary or extraordinary meetings. Ordinary General Assembly meetings must be held within 3 months following the end of each fiscal year to discuss and resolve the issues mandated by the Turkish Commercial Code ("TCC") such as approval of the activity report and financial statements, release of Board of Directors members. Extraordinary meetings can be held whenever necessary.

The General Assembly is composed of all shareholders or their representatives (through proxies). The General Assembly is vested with the authority to amend the articles of association of the company, to elect or remove the Board of Directors members, auditors and liquidators, to determine the allocation of the net profit and dividends, to decide upon the remuneration of the Board of Directors members, to dissolve the company, to approve financial statements and moreover to make decisions regarding all matters which by the TCC or pursuant to the articles of association are to be resolved by the General Assembly, except for decisions which can only be taken by the Board of Directors.

2. QUORUMS IN NON-PUBLIC JOINT STOCK COMPANIES

2.1. General Quorum: Except for the decisions mentioned below in Articles 2.2 and 2.3 and unless a higher (cannot be lower) quorum is required by the articles of association (as drafted/amended by the shareholders), General Assembly meetings can be held with the presence of shareholders (or their proxies) owning shares which represent at least 1/4 of the capital of company. This meeting quorum must be maintained throughout the entire meeting. If the meeting quorum is not met in the first meeting, no meeting quorum will be required for the second meeting.

The decisions can be adopted with the majority of the votes that are represented in the meeting (both first and second).

2.2. Changing the Articles of Association: Except for the decisions mentioned below in Article 2.3 and unless a higher (cannot be lower) quorum is required by the articles of association, the articles of association can only be amended with the presence of shareholders (or their proxies) that hold shares which represent at least 50% of the capital of the company, in a meeting.

If the meeting quorum is not met in the first meeting, second meeting must be held within a month following the first meeting and in the second meeting, the required meeting quorum is the presence of shareholders (or their proxies) that hold shares which represent at least 1/3 of the capital of the company.

The decisions can be adopted with the majority of the votes that are represented in the meeting (both first and second).

2.3. Super Majority Exceptions:

2.3.1. Unanimity Requirement:Following decisions can only be taken with the consent of all shareholders (or their proxies) (required in all meetings):

• Imposing liabilities or secondary liabilities on shareholders for the purpose of recovering balance sheet losses,
• Moving the company headquarters abroad.

The articles of association cannot require a lower quorum.

2.3.2. %75 Requirement: Unless the articles of association requires a higher quorum (cannot be lower), following decisions can only be taken with the consent of shareholders (or their proxies) owning shares which represent at least 75% of the capital of the company (required in all meetings):

• Change of company's purpose and subject,
• Issuance of privileged shares,
• Restriction on transfer of registered shares,
• Capital decrease,
• Collective sale of significant amount of assets,
• Liquidation of the company.

2.3.3. The preemption right of the shareholders (to obtain newly issued shares in case of capital increase) can only be limited or abrogated with the affirmative votes of shareholders (or their proxies) owning shares that represent at least 60% of the capital of the company (required in all meetings).

2.3.4. Resolutions regarding revocation of liquidation can only be adopted with the affirmative votes of shareholders (or their proxies) owning shares which represent at least 60% of the capital of the company (required in all meetings).

2.3.5. Resolutions for merger and demerger may only be adopted with the affirmative votes of 3/4 of the shareholders present in the General Assembly meeting, provided they own shares that represent at least 1/2 of the capital of the company (required in all meetings).

3. QUORUMS IN PUBLIC JOINT STOCK COMPANIES

3.1. General Quorum: Unless a higher quorum (cannot be lower) is required by the articles of association, the general quorum mentioned in Article 2.1 applies to public companies for all decisions except for those indicated in Articles 3.1 and 3.2 below.

3.2. Unanimity Requirement: In public companies, decisions regarding i) moving the company headquarters abroad and ii) imposing additional primary or secondary liabilities on the shareholders in order to recover the losses indicated in the balance sheet, can only be taken with the consent of all shareholders (or their proxies) (required in all meetings). The articles of association cannot require a lower quorum.

3.3. 2/3 Requirement: In public companies, unless a higher quorum (cannot be lower) is required by the articles of association, 2/3 of the shareholders present at a General Assembly meeting (who have right to vote) must consent to the decisions to adopt decisions (with no meeting quorum required) regarding i) limiting preemption rights of the shareholders, ii) granting authority to the Board of Directors to limit the preemption rights within the context of registered capital system, iii) capital decrease and iv) the decisions which are defined as "important decisions" according to the capital markets legislation such as merger, change of company type, dissolution, sale of all or significant amount of assets, delisting, acquiring or leasing significant amount assets within the context of affiliated transactions, material changes in the scope of activity, granting or changing the scope of privileges of the shareholders, etc.

However, in case at least 50% of the total shares (granting right to vote) of the company is represented in a meeting, the abovementioned decisions can be taken with the majority of such votes, unless a higher quorum (cannot be lower) is required by the articles of association.

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.