Turkey: Convening A Formal Shareholders Meeting Under Turkish Commercial Code

The procedure for inviting the general assembly to meeting has been set forth in Article 410 of Turkish Commercial Code ("TCC") numbered 6102. According to the given article; "i) General assembly may be convoked by board of directors even though its duration is expired. Liquidators can convoke the general assembly also for respects related to their duties. ii) In case of irregular meeting schedule of board of directors, failure to reach quarum or unavailability of it, sole shareholders can convoke general assembly with permission of court. Decision court is definite."

Those parties who had briefly summarized (except a liquidation officer who is also entitled to call a shareholders meeting when the company is in formal legal liquidation process), are empowered to summon the shareholders for a formal meeting by law.

I) Board of Directors

The first step is to ensure a formal board meeting is convened in order to decide on issuing an invitation for a shareholders meeting and a proposed agenda. The Board of Directors shall be invited to convene with an agenda to call and organize a formal shareholders meeting to discuss and decide on specific issues predetermined in the meeting agenda. Pursuant to Article 410 of the TCC; shareholders may be called for a meeting by the board even though the assembly is overdue.

In case board agrees to issue an invitation, it must also agree on a purposed agenda and the form of invitation to be made to all shareholders in connection with a scheduled shareholders meeting.

II) Minority Shareholders

It is possible that some or any board member may not always cooperate with a shareholders' meeting request, reject or ignore a request to this affect. In case the board refuses (or is blocked by way of absence of meeting quorum) to convene for this purpose, possibly due to non cooperation by the chairman in the form of refusing a board meeting request then an alternative procedure may be followed.

Pursuant to Article 411 of the TCC; " i) shareholders representing minimum one tenth of capital or one twentieth of capital in public companies may demand board of directors to convoke the general assembly by stating in written the required reasons and agenda and or if it will be held, put the respects in agenda about them that they demand decision be taken. Right to call can be given to shareholders having fewer shares with articles of association. ii) Demand to put an item into agenda should reach board of directors before the date on which announcement fee is deposited for call announcement to be published in Turkish Trade Registry Gazette. iii) Demand to call and add an item in agenda is made via notary public. iv) If board of directors accepts the call, general assembly is convoked in a manner that it will be held within minimum forty-five days; otherwise call is made by demand holders".

As per article 412; "In the events; demand of shareholders to call or add an item in agenda are rejected by board of directors or no positive answer is given to demand within seven working days, upon the application of same shareholders to the commercial courts on first instance at the place of company's head office can decide whether general assembly is convoked. If court determines meeting is required, it assigns a guardian to arrange the agenda and he calls in accordance with the provisions of law. In its decision it shows the duties of guardian and its Powers to prepare the documents. Unless there is an obligation, court examines the file and takes a decision accordingly. Decision is definite".

III) Any Shareholder

As per Article 410/II; there may be cases where the board is physically unable to meet frequently, does not have the necessary meeting or decision quorums or may not be in existence at all again possibly due to incapacity or resignation of all directors.

According to the given article; "ii) In case of irregular meeting schedule of board of directors, failure to reach quarum or unavailability of it, sole shareholder can convoke general assembly with permission of court. Decision court is definite."

IV) Custodian

In case the company is being run by a custodian due to statutory corporate bodies being non-existent or when a court appoints a custodian for the sole purpose of inviting and organizing a shareholder meeting as per Article 412, the right to invite shareholders to a meeting will be exercised by such custodian.

In light of above, it is crucial to state that in case all shareholders are able to unanimously convene and take a formal decision, invitation procedure is regarded as redundant by law. Pursuant to Article 416; "Reserving the provisions to participate in general assembly and related to the performance of the meetings of general assembly unless any one of them raises an objection, holders of all shares or their representatives may be held as general assembly by disregarding the procedure about call and as long as this quorum is saved they can take a decision".

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.