Shares in joint stock companies are generally issued
in registered or bearer form. Registered shares belong to the persons
registered in their names and these shareholders are directly related to the
company. In joint stock companies, shareholders are the persons who contribute
to the capital of the company and have rights corresponding to their shares.
Minority rights in joint stock companies generally serve the purpose of
ensuring equal and fair treatment of shareholders. In this context, minority
shareholders are generally protected in terms of influence on company
decisions, access to information, transparency and fairness. Pursuant to the Article
411 of the Turkish Commercial Code Nr. 6102 ("TCC"), shareholders who
constitute at least 10% of the share capital in non-public companies and at
least 5% in publicly traded companies are defined as "scarcity" or
"minority".
The Turkish Commercial Code contains regulations that
aim to protect minority rights. The reason for this is that minority
shareholders face certain risks. Economic risks come first among these risks.
Joint stock companies are managed according to the majority principle. Article
418 of the Turkish Commercial Code sets out as follows: "Decisions are
made by the majority of the votes present at the meeting." As can be
understood from this provision, the rights of minority shareholders require
protection. A minority share represents a certain percentage of the company's
total shares. Minority shareholders are generally less influential in company
management. However, legal regulations and the bylaws of the company grant
various rights to minority shareholders. Among the rights of minority
shareholders are such important rights as attending general assembly meetings,
voting, and receiving information about the company’s activities. These rights
support minority shareholders in participating in the management of the company
and protecting their interests.
In particular, since decisions taken at general
assembly meetings may affect minority shareholders, it is important that
minority shareholders participate in these meetings and vote effectively. This
will ensure fairer and more transparent corporate governance.
Under the Turkish Commercial Code Nr. 6102, the rights granted to minority shareholders in joint stock companies are the right to obtain and review information, the right to call the general assembly for a meeting and have an item added to the agenda, the right to request appointment of a special auditor, the right to file a lawsuit for dissolution of the company for just cause, the right to request issuance of registered share certificates, the right to attend and vote in the general assembly meetings, and the right to request postponement of discussion of the financial statements.
THE RIGHT TO OBTAIN AND REVIEW
INFORMATION
The right to obtain and review information
ensures a more balanced relationship with the company's management and ensures
the continuity of the company and the protection of trust among shareholders.
In order for the shareholder to exercise her/his rights consciously and
effectively, s/he should also be informed about the activities of the company.
For this purpose, a regulation under the main heading "Right to obtain and
review information" has been included under the Article 437 of the TCC,
and this right may not be abolished or restricted by the articles of
association or resolutions. Shareholders
have the right to physically examine the company's financial statements, annual
reports and audit reports at least fifteen days before the date of the general
assembly meeting. Each shareholder may
request information from the board of directors regarding operation of the
company at the general assembly meeting. The shareholder may request information
from the board of directors on the company's affairs and from the auditors on
the manner and results of the audit, and in the case of a group of companies,
the obligation to provide information also covers affiliated companies within
the framework of the Article 200 of the TCC. The information to be provided
must be qualified, attentive and truthful in accordance with the principles of integrity
and accountability. The subject matter of the right to information, which
serves the purpose of enabling the shareholder to exercise her/his rights in an
informed manner and to exercise her/his will in the general assembly with
accurate data, consists of all works and transactions that may be considered
within the scope of management and auditing activities. [1]
If information is provided to a shareholder
outside the scope of the general assembly, such information must be provided to
the other shareholders who make a request, within the same scope, even if there
is no item on the agenda. [2] Shareholders whose requests for information or review
are left unanswered or rejected or delayed, and who cannot receive information
for these reasons, may apply to the commercial court of first instance, where
the company's headquarters is located, within ten days following rejection of
the request, and in other cases after a reasonable period of time.
The decision, dated 25.12.2019 and bearing
the Basis number 2019/264 and the Decision number 2019/1238, of the 4th
Commercial Court of First Instance of the Anatolian Side of Istanbul reads as
follows:
"It has been considered under
the ------- records taken into the file also by the plaintiff that the
plaintiff is a shareholder of the defendant company -------, and that the
plaintiff applied to the defendant company on --------- and submitted his
request for information, and the plaintiff's request was notified to the
defendant company on ----. Although the plaintiff waited for a response, the
defendant company did not give any response to the plaintiff's notice, the
plaintiff filed the lawsuit 21 days after expiration of the period given in the
notice, and this period was considered as a reasonable time within the scope of
the article 437 of the TCC and the case was examined on the merits.
Although the petition and the preliminary
proceedings report were served to the defendant company, the defendant company
did not put forward any defense for protection of the plaintiff's request to
remain indifferent to the plaintiff's request, nor did the company reveal that
it announced the financial statements. As a matter of fact, it is understood
that there is no issue in this regard in the -- records included in the file.
Accordingly, since it is understood
from the entire file that the claimant's request falls within the scope of the Article
437 of the TCC, it has been ordered and adjudged that the legal action be
accepted, and that " a copy of ------ of the defendant company for the
year --- be served to the plaintiff at the defendant's expense via notary
public or by mail within one week from the notification of the reasoned
decision to the defendant company".
JUDGMENT: It is hereby ordered and
adjudged for the reasons explained hereabove that
1-The legal action be ACCEPTED"
[3]
In this context, the 4th Commercial Court
of First Instance of the Anatolian Side of Istanbul decided to accept the legal
action filed after the plaintiff's request for information and review remained
unanswered.
The Right
to Call the General Assembly to Meeting and to Have Items Added to the Agenda
The rights of minority shareholders to call the general assembly to meeting and to have items added to the agenda are generally determined within the framework of the articles of association of the companies and the related statutory regulations. In this context, minority shareholders may request the board of directors to convene the general assembly meeting in writing, specifying the reasons for delay and the agenda, or if the general assembly is already convened, to add to the agenda of the meeting the issues they want to be discussed and resolved at the general assembly meeting. Pursuant to the Turkish Commercial Code Nr. 6102, the minority's call request and requests to add items to the agenda must be made through a notary public.
Right to Request Appointment of a Special Auditor
The Article 438 of the Turkish Commercial Code reads
as follows: "Each shareholder may request the general assembly to clarify
certain events through a special audit if it is necessary for exercise of
shareholding rights and if the right to obtain or review information has been
previously exercised even if it is not included in the agenda. If the general assembly approves the request,
the company or each shareholder may, within thirty days, request appointment of
a special auditor from the commercial court of first instance where the company
headquarters is located." The purpose of requesting appointment of a
special auditor is for the shareholders to be informed about the events that
directly or indirectly concern the company and consequently to exercise their
shareholding rights. In this context, the decision, bearing the Basis number 2000/5472
and the Decision number 2000/6335, of the 11th Civil Chamber of the
Court of Cassation reads as follows:
"As emphasized in the decision, dated 15.04.1982
and bearing the Basis number 1269 and
the Decision number 1727, of our Chamber, according to the provision of the Article
348/2 of the TCC, the existence of the reasons for appointment of a special
auditor by the minority shareholders is not required to be proven conclusively.
The legislator has deemed evidence and indications that more or less confirm
the facts put forward for appointment of a special auditor as sufficient.
Whether or not the matters set forth in the text of the said article are
present in the case will be revealed as a result of the examination and
research to be conducted by the special auditors. In addition, since the facts
that will be the basis for appointment of a special auditor cannot be mentioned
in the final judgment, it is difficult to find the basis for seeking conclusive
evidence. In the requests to investigate the degree of authenticity of the
balance sheet, which fall within the field of work of the special auditors and
are related to the result thereof, it is obligatory to be even more moderate in
terms of appointment.
Since the plaintiff claims that the balance sheet does
not reflect the real situation and puts forward a number of allegations, and
since it was stated that some of the income and expense items in the balance
sheet may be incorrect due to incorrect placement during the expert examination
commissioned by the court, although this situation alone justifies the request
for appointment of a special auditor, it was not correct to decide to reject
the case as written, while it should be decided to accept the case, and the
decision should be reversed in favor of the plaintiff for the reason
explained." [4]
It is ruled that the existence of the reasons for the
request of the minority shareholders for appointment of a special auditor does
not have to be conclusively proven. The legislator has deemed evidence and
indications that more or less confirm the facts put forward for appointment of
a special auditor as sufficient.
Right to File a Lawsuit for Dissolution of the Company
for Just Cause
Article 531 of the Turkish Commercial Code sets out as
follows: "In the presence of justified reasons, the holders of the shares
representing at least one tenth of the capital and one twentieth in publicly
traded companies may request the commercial court of first instance in the
place, where the company's headquarters is located, to decide on dissolution of
the company. Instead of dissolution, the court may decide that the plaintiff
shareholders be paid the real value of their shares as of the date closest to
the date of the decision and that the plaintiff shareholders be dismissed from
the company, or may decide on another acceptable solution appropriate to the
situation." In this context, minority shareholders are entitled to file a
termination lawsuit. What should be understood from the concept of just cause
is that the purpose of the partnership at the beginning of the partnership can
no longer be realized by the parties. In this case, the existence of just cause
is accepted. In this context, the decision, bearing the Basis number 2019/2942
and the Decision number 2021/1647 K, of the 11th Civil Chamber of
the Court of Cassation reads as follows:
"The lawsuit is related to the request for
termination of the joint stock company for just cause based on the Article 531
of the TCC.
Since a joint stock company is a capital partnership,
as a rule, it is accepted that the personal characteristics of the shareholders
cannot play a role in the functioning of the partnership. Therefore, in
large-scale joint stock companies with a large number of shareholders, personal
reasons alone do not constitute just cause. However, in family businesses and
small partnerships, there is a significant similarity with personal
partnerships. In this respect, depending on the characteristics of the concrete
case and the type of company, it should be accepted that even in a joint stock
company, which is a capital partnership, personal reasons will also be
considered as just cause and the dissolution of the partnership, the dismissal
of the plaintiff shareholders from the partnership or other acceptable solution
appropriate to the situation will be decided. After these explanations, when it
comes to the concrete case, the defendant company, of which the plaintiff is a
partner, is a family company. It should be accepted that the problems between
the partners of the company, especially the dispute between the partners and
the insult arising from the extra judicial partner, will constitute just cause
for such companies. In this context, the grouping among the partners that
occurred after the mutual insult incident between the plaintiff and the extra
judicial partner ..., which was transferred to the criminal court, constitutes
just cause for termination as a whole. However, it is essential to ensure the
continuity of the company and considering that termination is the last resort,
an evaluation should be made in accordance with the Article 531 of the TCC and
a decision should be made according to the result, while it was not correct for
the Regional Court of Justice to decide to reject the appellate requests made
against the decision given by the Court of First Instance to dismiss the case
on the grounds that justified reasons did not occur, and it required a
reversal." [5]
The Court of Cassation interprets the Article 531 of
the TCC more broadly in family companies. However, in terms of joint stock
companies with a large number of shareholders, since a joint stock company is a
capital partnership, it accepts that the personal characteristics of the
shareholders cannot play a role in the functioning of the partnership.
Therefore, it adopts the principle that personal reasons alone do not
constitute just cause in large-scale joint stock companies with a large number
of shareholders.
Right to Request Postponement of
Discussion of the Financial Statements
The minority representing one tenth
of the share capital has the right to request that the balance sheet
discussions be postponed for at least one month in the general assembly
meeting. In this context, the request for postponement of the balance sheet
discussions may result in postponement of all matters to be discussed in the
general assembly meeting. The right of the minority shareholders, as set out
under the Article 337 of the TCC, to request postponement of discussion of the
financial statements does not stipulate the right to request postponement,
provided that the right holder shows a reason. In this case, the minority
shareholder may request postponement of discussion of the financial statements
without any justification. In the case law wording, bearing the Basis number 2015/7411
and the Decision number 2016/3647, of the 11th Civil Chamber of the
Court of Cassation, it is stated that there is no need to show justification
when requesting postponement;
"According to the allegation,
defense and the entire file scope, the court held that in Article 420/1 of the
TCC Nr. 6102, " discussion of the financial statements and related matters
shall be postponed for one month upon the request of the shareholders holding
1/10 of the capital and 1/20 of the capital in publicly traded companies, upon
the decision of the chairman of the meeting without the need for the general
assembly to take a decision." and Article 413 (3) titled
"Agenda" states that " dismissal of the members of the board of
directors and election of new ones shall be deemed to be related to discussion
of the year-end financial statements. ", and in the concrete dispute, it
was announced under paragraph 1 of the minutes of the general assembly meeting dated
25/03/2013 that discussion of these issues was postponed to one month later
upon the request of the plaintiffs, and it was decided to accept the lawsuit on
the grounds that it would not be possible to take a decision on dismissal of
the members of the board of directors and election of new ones in accordance
with the Article 413/3 of the TCC, and that it would not be possible to take a
decision on election of new members together with the old members of the board
of directors in the ordinary general assembly subject to the lawsuit in the
face of the regulation of paragraph 413/3 of the TCC.
The decision was appealed by the
defendant's attorney. According to the information and documents under the case
file, the fact that there is nothing contrary to the procedure and the law in
the discussion and evaluation of the evidence relied on in the justification of
the court decision, and that in the concrete case, all of the candidates for
the Board of Directors members have fulfilled the same duty in the previous operating
period and their re-election as directors in the same general assembly despite
the postponement, all appellate objections of the defendant's attorney are not
relevant. For the reasons explained hereinabove, all appellate objections of
the defendant's attorney are rejected and the judgment, which is in accordance
with the procedure and law, is APPROVED," [6]
and dismissed the appellate request.
Thus, minority shareholders may request postponement of discussion of the
financial statements without providing any justification.
CONCLUSION
Turkish Commercial Code Nr. 6102 sets
out many innovations on minority rights in parallel with the contemporary and
modern legal systems. As a matter of fact, since joint stock companies are
managed with a pluralistic approach, protection of minority rights holders
becomes even more important. In this context, minority rights in joint stock
companies ensure transparency, fair treatment and effective participation. In
joint stock companies governed with a pluralist approach, the rights of the
minority are protected both by the articles of association of the company and
the Turkish Commercial Code and the related laws. In this context, if minority
shareholders, who have important rights, exercise these rights effectively,
there will be a transparent and fair order within the company.
Ebru Erkmen, Legal Intern
References:
1. Bahtiyar, Mehmet; Ortaklıklar
Hukuku, 21st Ed., Istanbul 2021, p.296
2. Atalay, Oğuz “Anonim Şirketlerde
Bilgi Alma ve İnceleme Haklarının Mahkeme Aracılığıyla Kullanımı” Journal of
the Faculty of Law of Dokuz Eylul University, Special Issue 2014
3. The decision, bearing the
Basis number 2019/264 and the Decision number 2019/1238, of the 4th Commercial
Court of First Instance of the Anatolian Side of Istanbul
4. The decision, bearing the Basis
number 2000/5472 and the Decision number 2000/6335, of the 11th Civil
Chamber of the Court of Cassation
5. The decision, bearing the
Basis number 2019/2942 and the Decision number 2021/1647, of the 11th
Civil Chamber of the Court of Cassation
6. The decision, bearing the Basis
number 2015/7411 and the Decision number 2016/3647, of the 11th Civil
Chamber of the Court of Cassation
