In accordance with the Turkish Commercial Code, all joint stock and limited companies must convene their ordinary general assembly meetings every year ,within three months of the closing of the previous accounting period to discuss and decide on the results of the previous accounting period. Companies may also call an extraordinary of the general assembly meeting as and when necessary.
We have tried to list 5 important points that will help you determine exactly what terms and conditions you will need to consider when planning an ordinary or extraordinary General Assembly meeting for non-public companies. We would like to remind you that various different criteria may be applicable for publicly traded companies
1-WILL ALL SHAREHOLDERS OF YOUR COMPANY ATTEND THE GENERAL ASSEMBLY MEETING ?
While planning your general assembly meeting, knowing if all of your shareholders will attend the meeting is important to determine whether the meeting should be held be with formal invitation or not. This condition is the same for both joint stock and limited companies.
According to art. 414 of the TTC, which defines the principal method for calling a company General Assembly meeting, the call for the General Assembly must first be published in the Turkish Trade Registry Gazette at least 15 days before the scheduled meeting date. In addition to this legal requirement, it is possible to aggravate the written invitation procedure with the articles of Association of the company (for example, to add a a local newspaper announcement requirement in addition to the Turkish Trade Registry Gazette announcement procedure).
However these published announcements are not sufficient for the General Assembly invitation,. Shareholders who informed their addresses by giving the company a share certificate or a document confirming their ownership in advance, as well as shareholders registered in the company Share Ledger must also be invited to the meeting with a registered letter. If this invitation procedure is not properly followed; for example, if the newspaper announcement is not made or the invitation letters are not sent or the invitation periods are not met, the validity of the general assembly meeting becomes controversial.
However, if all shareholders or their proxies attend the planner general assembly meeting and no one objects to the non-compliance with the invitation procedure, it no longer matters whether the legal invitation procedure has been properly complied with. Therefore, in companies where there are no disputes between shareholders and all shareholders are certain to attend the meeting, when determining your meeting date you do not have to take into account the 15-day announcement period or make the above-mentioned announcements and invitations.. If you anticipate that such a 100% participation will not be possible, then you will need to prepare your general assembly calendar and documents in accordance with the provisions of the formally announced General Assembly.
It should be noted that even if a single shareholder fails to attend the meeting or objects to convene General Assembly without a formal invitation in this manner, the validity of the General Assembly will again become controversial.
2-IS IT NECESSARY FOR A MINISTRY REPRESENTATIVE TO BE PRESENT AT YOUR GENERAL ASSEMBLY MEETING?
If a representative of the Ministry of Customs and trade is required to be present at the General Assembly of the Joint Stock Company, you will need to apply to the Provincial Directorate of the Ministry with a request for the appointment of a representative at least 10 days before the date of the General Assembly. A representative of the ministry is not required to be present at the General Assembly meetings of Limited liability companies.
In accordance with the ” Regulation on the Procedures and Principles of the General Assembly meetings of Joint Stock Companies and the Representatives of the Ministry to Be Present at These Meetings” :
- a) At all ordinary or extraordinary general assembly meetings of Joint Stock Companies whose incorporation and articles of association amendments are subject to the permission of the Ministry of Customs and Trade (such as banks and insurance companies);
- b) For joint stock companies that are not subject to a permission such as defined above, if any of the following issues is on the agenda of ordinary or extraordinary general assembly meetings;
* Increase or decrease of capital,
* Switching to the registered capital system and exiting the registered capital system, increasing the ceiling of the registered capital,
** Amendment of the articles of association to change the scope of activity,
* if there are merger, spin-off, or type conversion issues;
- c) Even if the company is not subject to permission and there are no issues listed in Paragraph b on the agenda of the General Assembly:
* Joint stock companies applying electronic participation system to the General Assembly and
* All General Assembly meetings of joint stock companies abroad and special board meetings of privileged shareholders abroad; require the attendance of a Ministry representative.
Finally, it is not necessary to have a Ministry representative present at general assemblies other than those mentioned above, meetings of companies with single shareholder (except for companies subject to permission) and at special board meetings of privileged shareholders.
3-IS YOUR COMPANY SUBJECT TO MANDATORY INDEPENDENT AUDIT?
If your company is subject to mandatory independent audit, According to art 407 (2) of TCC, your independent auditors must be present at the General Assembly meeting of the period in which they conducted their audit. According to TCC art.437 each shareholder may request information from auditors at the General Assembly about the manner and results of the audit.
In addition, the audited financial statements and the annual activity report of the board of directors must be keep available during the General Assembly meetings of the companies subject to mandatory independent audit. According to TCC arti.397 (2) Financial Statements and the Annual Report of the Board of Directors that are not audited in spite of a mandatory audit requirement are deemed to be non-existent. As a result of financial statements that are considered non-existent, the company cannot; i) distribute profits, ii)increase or decrease capital.
Companies that have auditors despite not having a legal obligation to do to so are not required to fulfil the conditions defined above.
4- HAVE THE SHAREHOLDERS WHO WILL BE REPRESENTED BY A PROXY AT THE GENERAL ASSEMBLY MEETING ISSUED THEIR NOTARIZED POWERS OF ATTORNEY?
Until the relevant legislation was amended at the end of 2020, it was sufficient for shareholders of non-public companies to use a power of attorney that was not notarised for authorising a person to be their proxy at general assembly meetings. Adding a notarized signature circular of such a shareholder as an attachment to the POA was sufficient.
With the mentioned amendment, this possibility has been terminated and it is now mandatory for shareholders who want to have themselves represented by proxy at general assembly meeting to issue a notarized power of Attorney specifically for the relevant general assembly meeting.
The format of this General Assembly power of attorney is also determined by legislation and the power of attorney in question must comply with the example contained in the annex of the ” Regulation on the Procedures and Principles of the General Assembly meetings of Joint Stock Companies and the Representatives of the Ministry to Be Present at These Meetings”.
5-ARE OUR COMPANY COMMERCIAL BOOKS READY TO BE REVIEWED BY SHAREHOLDERS?
In accordance with the article 437 of the TCC, shareholders in joint stock companies have the right to physically review the audit reports, financial statements and annual reports of the company, at least 15 days before the date of the General Assembly meeting. In addition, the financial statements and consolidated statements are kept actively open for review, for a period of 1 (one) year so that shareholders can use their night to receive information. In this context, each shareholder also has the right before general assembly meetings to request a copy of the balance sheets and income statements, with expenses to be covered by the company.
Therefore, when planning your General Assembly meeting of the company, you should be ready to open your aforementioned books for review to shareholders at the company headquarters and to provide a copy of the balance sheet and income statement to shareholders who wish to obtain one.
In 2020, in connection with the special conditions of the pandemic period that we experienced, Ministry of Customs and Trade issued various temporary and exceptional regulations related to the General Assembly meetings of companies. In 2021, it will be beneficial for all companies to take into account that special arrangements may be made by the Ministry from time to time on these issues and to continue following up the relevant developments.
İrem Alevok
