ABSTRACT
The Turkish Commercial Code No. 6102 ("TCC") allows companies to adopt resolutions through circulation as an alternative to physical board meetings and to convene board meetings on an electronic platform. In order to adopt resolutions via circulation method, none of the board members shall request a physical meeting and the proposal, drafted as a resolution, must be circulated to all board members and be approved in writing by the majority. Additionally, the papers containing the approval signatures must either be attached to the board resolution book or transformed into a resolution with the signatures of the approving members and then recorded in the resolution book. To hold board meetings electronically, companies must include the statement specified in Article 6 of the Communiqué on Electronic General Meetings (excluding General Assemblies) of Joint Stock Companies ("Communiqué") in their articles of association and prove that they have a system suitable for electronic board meetings to Trade Registry. This article explores the distinctive aspects of adopting board resolutions via circulation methos and conducting board meetings electronically.
INTRODUCTION
The process of adopting board resolutions plays a significant role in the management and representation of joint stock companies. With advances in technology, speed and cost factors have become key considerations in companies' decision-making processes and in conducting board meetings. The requirement for board members to attend meetings physically, with no option for proxy representation, can disrupt the resolution adoption process for companies, particularly for companies with foreign capital. To address these issues, the TCC facilitates the adoption of board resolutions through circulation as an alternative to physical board meetings and allows board meetings to be held in an electronic platform. The distinctive aspects of adopting board resolutions through circulation and holding board meetings electronically are the subject of this article.
- ADOPTING RESOLUTIONS THROUGH CIRCULATION
The first alternative to physical board meetings is the procedure outlined in Article 390 of the TCC, which allows board resolutions to be adopted by circulating the proposal among board members in the absence of a physical meeting. This method is favored by companies that do not prefer transitioning to an electronic board system and enables board resolutions to be adopted even when board members cannot convene physically, provided certain conditions are met.
To adopt a resolution through circulation method, no board member shall request a physical meeting. In case even one member requests a physical meeting, this method cannot be employed. Once this condition is met, the proposal, drafted as a resolution, must be shared with all board members, and approved in writing by the majority of the board. While it is not necessary for all signatures to appear on the same document, all signed papers must either be attached to the board resolution book or consolidated into a single resolution with the signatures of approving members, then recorded in the resolution book to validate the decision.
To highlight, it is not a must to share the board resolution proposal and the approvals in written form. Thanks to the Central Registry System ("MERSIS") which facilitates board resolutions to be adopted electronically in the light of procedures and principles stipulated in Article 390/4 of the TCC, it is possible to take resolutions by using this system as well. In this sense, MERSIS supports electronic decision-making mechanism, requiring all board members to sign the proposal electronically by indicating their acceptance or rejection.
- ELECTRONIC BOARD MEETINGS AND THEIR CONDITIONS
Article 1527 of the TCC permits board meetings to be held electronically or for some members to attend physically held meetings via electronic means. To implement an electronic participation and voting system in board meetings, joint stock companies must fulfill certain requirements.
- First, companies must incorporate the following provision in their articles of association, as stated in Article 6 of the Communiqué: "Those entitled to participate in the board of directors/managers' meetings of the company may also participate in these meetings electronically in accordance with Article 1527 of the Turkish Commercial Code. The company may establish an Electronic Meeting System to enable the rights holders to participate and vote electronically in these meetings in compliance with the provisions of the Communiqué on Electronic General Meetings of Joint Stock Companies Outside of General Assemblies, or may procure services from systems created for this purpose. The rights of the beneficiaries as specified in the relevant legislation shall be facilitated during the meetings in line with the provisions of the Communiqué through either a system established pursuant to the company's articles of association or a system procured for support services."
- Companies must demonstrate that they have a system suitable for electronic board meetings.
In this context, pursuant to Article 1527 of the TCC, companies must maintain a website dedicated to enabling board members to participate, make statements, propose suggestions, and vote electronically. The "Electronic Meeting System" ("ETS") serves as the system for board meetings. Companies may either establish this system themselves or seek support from providers of such systems during the setup phase. In this regard, Merkezi Kayıt Kuruluşu Anonim Şirketi (Central Securities Depository) offers an Electronic Board Meeting System ("e-YKS").
According to the Communiqué, companies must substantiate the technical adequacy of their electronic means for effective participation in meetings and ensure compliance with the Law and the Communiqué's provisions through a technical report, which must then be registered and announced by the Trade Registry Office.
The quorum requirements stipulated in the TCC and the company's articles of association remain unaffected by the fact that board meetings are conducted electronically. Unless the articles of association provide otherwise with a stricter provision, electronic board meetings will still be convened with the majority of the board members, and decisions will be adopted by the majority of those present at the meeting.
In addition, the requirement to record board resolutions in the board resolution book applies to resolutions adopted electronically. The e-YKS system provides an electronic signature output that displays those who attended the meeting, those who voted, those who rejected or accepted the proposal, and the result. This electronic signature output must be appended to the company's board resolution book.
Furthermore, companies using the ETS must retain all records related to ETS transactions and the identity information of board members participating electronically, ensuring their confidentiality and integrity for ten (10) years.
III. CONCLUSION
The electronic board meeting method provides advantages in terms of speed and cost efficiency in decision-making processes and conducting board meetings. However, companies opting for this method face certain challenges, such as participators' inability to access the system without electronic signatures and the near necessity of outsourcing technical requirements, which may render it less favorable for some companies. Consequently, for smaller companies in particular, adopting resolutions through circulation method in written form or as facilitated by MERSIS under Article 390/4 of the TCC may prove to be a more effective tool.
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.
