General Overview
Under Turkish law, joint stock companies are not entitled to hold general assembly meetings solely by electronic means. However, shareholders or their representatives can attend a physically held general assembly meeting electronically if they fulfill requirements stipulated in the Regulation on General Assembly Meetings of Joint Stock Companies by Electronic Means ("Regulation") and the Communique on Electronic General Assembly System Applied to General Assembly Meetings of Joint Stock Companies ("Communique"). You can read the Regulation here and the Communique here (both available in Turkish only).
Once these requirements are met, according to Article 1527/5 of the Turkish Commercial Code No: 6102, electronic participation in general assembly meetings, making suggestions, expressing opinions, and voting has the same legal consequences as physical participation.
Enabling electronic participation in general assembly meetings is mandatory for listed joint stock companies. Other joint stock companies may implement an electronic participation system at their discretion.
Prerequisites to Enable Electronic Participation in General Assembly Meetings
1. The Requirement for Articles of Association
Joint stock companies must include a particular provision set forth by the Regulation in their articles of association1 in order to allow electronic participation in general assembly meetings and to employ an electronic general assembly system.
That being said, the Ministry of Trade ("Ministry") granted an exemption to this requirement in light of the Covid-19 pandemic. Accordingly, companies whose articles of association do not include the relevant provision may still enable electronic participation throughout the Covid-19 pandemic. You can read the relevant announcement by the Ministry here (available in Turkish only).
2. Maintaining an Electronic General Assembly System
An electronic general assembly system ("EGAS") refers to a platform that enables participants to attend general assembly meetings online. Private joint stock companies can create an online platform themselves or they may prefer to obtain this service from third-party providers. Listed joint stock companies must receive this service from the Central Securities Depository.
This online platform must fulfill certain conditions regarding network security, information security, data protection, and standards for electronic signatures set out in the Regulation and the Communique. The online platform must also suffice to perform the following functions:
- Broadcasting video and audio,
- Posting messages to a message board,
- Enabling participants to sign documents with secured electronic signatures in a simultaneous manner,
- Responding to a request for access to the online platform in the shortest time possible,
- Keeping registrations made by shareholders before the general assembly meeting confidential,
- Enabling members of the chairmanship of the meeting, directors of the company and the Ministry representative to sign documents with a secured electronic signature.
Joint stock companies must obtain a technical report from designated institutions stating whether their online platforms fulfill the requirements set forth in the Regulation and the Communique. Following the issuance of a report, it must be registered with the commercial registry and announced in the official gazette. Technical reports must be renewed every three years.
In cases where joint stock companies prefer to outsource this service, they must ensure that the third-party provider has obtained and registered the necessary technical report, as this obligation also applies to electronic general assembly system providers. Without fulfilling this obligation, third-party providers are not entitled to offer such services.
3. Obtaining Secured Electronic Signatures
Shareholders who attend meetings electronically, and companies must obtain secured electronic signatures. Shareholders cannot access EGAS without a secured electronic signature.
In Turkey, individuals and entities must apply to Electronic Certificate Service Providers to create their secured electronic signatures.
The Process for Electronic Participation in General Assembly Meetings
1. Prior to the Meeting
1. Regardless of a meeting's agenda, attendance by a Ministry representative at general assembly meetings is mandatory for joint stock companies that have EGAS. Therefore, companies must request the assignment of a Ministry representative to attend meetings.
2. A company must download the following documents to their EGAS by using a secured electronic signature:
- an invitation letter (if the meeting is to be held under the invitation procedure),
- the meeting agenda,
- the list of those who have the right to attend the meeting.
3. Following this, shareholders who intend to attend the meeting electronically must submit their requests through the EGAS at least two days before the meeting date. In the case of listed joint stock companies, shareholders must submit their request at least one day before the meeting date.
4. The company will review shareholders' requests and either approve or reject them through the EGAS in a maximum of two business days. The request will be deemed to be accepted if the company fails to respond, (except in the case of listed joint stock companies).
5. Shareholders can withdraw their requests up to one day before the date of the general assembly meeting. Otherwise, their request becomes binding, and they cannot attend the general assembly meeting physically.
6. In cases where a representative attends a meeting on behalf of a shareholder, the representative's identity information must be registered with the EGAS.
2. During the Meeting
1. The company must commence the general assembly meeting electronically and physically in a simultaneous manner. In order to commence the meeting, the Ministry representative will check whether the requirements stipulated in the applicable laws are fulfilled.
2. If the requirements stipulated in the Regulation have not been fulfilled in a particular meeting, the meeting chairmanship can postpone the meeting after obtaining the opinion of the Ministry representative.
3. Shareholders (or their representatives) will be deemed to have attended the meeting once they access an EGAS by their secured electronic signature. Shareholders must access an EGAS at least five minutes before the meeting.
4. Shareholders (or their representatives) can express their remarks in writing through EGAS. Shareholders' remarks for an agenda item cannot exceed 600 words, and shareholders can submit their remarks only twice for the same agenda item.
5. Once the chairman of the meeting begins voting for an agenda item, shareholders (or their representatives) will vote electronically through EGAS. The chairman must commence voting simultaneously for all shareholders.
3. Following the Meeting
1. The company must deliver the attendance list and minutes of the general assembly meeting to the Ministry representative in an electronic storage device.
2. If the documents of the general assembly meeting (i.e., attendance list, minutes of the general assembly meeting, etc.) are issued through an EGAS by using a secured electronic signature, the company is not obliged to notarize the documents.
3. Companies that have created their own EGAS are obliged to keep the records of all transactions realized through the EGAS and the identity information of the shareholders (or their representatives) who attended meetings electronically for ten years by electronic means. During this period, companies must ensure the confidentiality and integrity of such information. In cases where companies receive EGAS services from third-party providers, these third-party providers bear this obligation.
Footnote
1 The aforementioned provision is as follows:
"Participation in the general assembly meeting electronically
Those who hold the right to attend the company's general assembly meetings may also attend these meetings electronically in accordance with Article 1527 of the Turkish Commercial Code. Under the provisions of the Regulation on General Assembly Meetings of Joint Stock Companies by Electronic Means, companies may either create an electronic general assembly system that will enable the right holders to participate in the general assembly meetings, express their opinions, make suggestions and vote electronically or may purchase these services from the systems created for these purposes. Under this provision of the Articles of Association, right holders and their representatives shall be able to exercise the rights stipulated in the provisions of the aforementioned Regulation through the established system at all general assembly meetings to be held."
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.
