Minority rights, which we come across in joint-stock company partnerships, regulated in the Turkish Commercial Code, are rights that aim to protect the minority group against the majority. The definition of a minority shareholder is organized in Article 411 of the Turkish Commercial Code; Shareholders constituting one-tenth of the capital and one-twentieth of publicly held companies are defined as minority shareholders. Minority shareholders will be able to benefit from the rights granted to minority shares within the framework of the law or by the articles of association sat down between the partners. It is essential to establish a balance between majority and minority shareholders in order to prevent and resolve conflicts of interest between partners and to prevent abuse of rights.
As per the legislation, there is no classification for minority rights, but to classify, minority rights are divided into positive and negative. Negative Minority rights appear as a form of preventing the will and savings of the majority. Positive minority rights, on the other hand, can be defined as the ability to perform certain savings operations at the will of the minority, despite the fact that it is contrary to the will of the majority.
Positive Minority Rights:
1) The Right to Convene the General Assembly Meeting and Add Items to the Agenda
Pursuant to articles 411 and 412 of the Turkish Commercial Code, Minority shareholders may request from the board of directors that the general assembly be called for a meeting or that the issues they want to be resolved to be added to the agenda as items, in writing and by stating the agenda. Provided that the invitation of the general assembly to the meeting is rejected by the board of directors or, in any case, if a positive response is not given within seven working days, Minority Shareholders may request the general assembly to be called for a meeting from the Commercial Court of First Instance where the company headquarters is located.
2) The Right to Request the Appointment of a Special Auditor
According to article 438 of the Turkish Commercial Code, any shareholder who is a partner of the company can request the appointment of a special auditor; however, in the case of the general assembly’s refusal against the request, only the Minority Shareholders have the right to apply to the court against the refusal decision in Article 439 of the same regulation. In that case, Minority Shareholders will be able to request the appointment of a special auditor from the Commercial Court of First Instance at the company’s location.
3) The Right to Request the Printing of a Registered Share Certificate:
If Minority Shareholders request, it is provided for in accordance with Article 486 of the Turkish Commercial Code that the registered share certificate will be printed and distributed to the shareholders. Thereby, actions that are not in line with the law, such as putting pressure on Minority Shareholders and limiting their transfer rights, were prevented by not printing or distributing the share certificates that occured on the de facto level. However, it should be noted that such an obligation will not occur in cases where a minority does not require the printing of shares.
4) The Right to Postpone the Negotiation of the Financial Statements
As per article 420 of Turkish Commercial Code, Minority Shareholders may request a postponement without the need for a resolution of the general assembly on the negotiation of the Financial Statements. In this case, the discussion of the Financial Statements is postponed to the next month by the decision of the chairman of the meeting. In accordance with the paragraph 2 of the same article, the situation of minority shareholders requesting a second postponement has been regulated, the lawmakers require that the financial statements have not been answered by concerned parties, taking into account the principles of a measure of honest accountability on issues that have been objected and recorded in the minutes. If this is the case in the actual case, Minority Shareholders can put forward their right to postponement for the second time. The postponement will not prevent the discussion of other items on the agenda.
Negative Minority Rights:
1) The Right to Prevent the Compromise and Release of Founders, Members of the Board of Directors, Auditors
As per article 559 of Turkish Commercial Code, the responsibilities of the founders, members of the board of directors, auditors, arising from the foundation of the company and the capital increase cannot be abrogated by compromise and release until four years have passed from the date of registration of the company. After the expiration of the specified period, the compromise and release process becomes legal only with the approval of the general assembly of the company. The relevant legislation provides the Minority Shareholders with an important right in the compromise and release processes. If the Minority Shareholders are against the approval of the compromise and release processes, these processes cannot be approved by the general assembly based on minority rights.
2) The Right to Request the Termination of the Partnership for Default
The right of Minority Shareholders to request the termination of the partnership for the default is regulated in Article 531 of the Turkish Commercial Code. A Minority Shareholder based on a justified reason may file a termination claim with the commercial court of first instance at the location of the company’s headquarters by declaring the company an opponent within a reasonable period of time from the appearance of a justified reason. The existence of justifiable reasons will be assessed according to the concrete event, but to give an example; situations where the interests of the minority are eliminated or that the continuation of the partnership becomes unbearable for the minority may constitute a justifiable reason.
Result:
As mentioned, the fact that the management of joint stock companies is under the control of majority shareholders leads to a conflict of interest in today’s conditions. In order to ensure that Minority Shareholders who are partners to the Company are not violated of their rights, and that these rights are used efficiently, it is significant that the regulations in the Turkish Commercial Code are interpreted by lawyers at the de facto level, as well as that Minority Shareholders are aware of their commercial rights.
Yağız Öztim
