What Does the New Regulation Say About General Assembly Meetings at Joint-Stock Companies?

Background:

Joint-stock companies are capital companies that are regulated under the Turkish Commercial Code (“TCC”). Joint-stock companies in Turkey are the preferred company type for both local and foreign investors due to their requirement for only one shareholder at incorporation, their ability to be publicly traded and the ease of transfer of shares.

One of the most important organs of joint-stock companies is the general assembly where shareholders are able to vote according to their share ratios in principle. According to the TCC, annual general assembly meetings (“GAM”) must be convened within three months following the end of each financial year, however, extraordinary GAMs can be convened whenever needed.

The Ministry of Commerce (the “Ministry”) published the amendment to the Regulation on the Procedures and Principles of the General Assembly Meetings of Joint-Stock Companies and the Ministry Representatives to Attend These Meetings (“Regulation”) in the Official Gazette dated 9 October 2020 (“Amendment”). You can reach the Amendment via here. (Available in Turkish only)

What has changed:

1. The proxies of proxyholders who attend on behalf of shareholders must be notarized.

Before the Amendment, proxyholders of shareholders of a non-public company could attend a GAM with a non-notarized proxy and a notarized signature statement of the shareholder. Following the Amendment, shareholders should issue a notarized proxy for their proxyholders to attend a meeting.

2. The attendance of a Ministry representative at GAMs of joint-stock companies with a sole shareholder is not obligatory.

Joint-stock companies with a sole shareholder are no longer obliged to summon a Ministry representative to GAMs, except for companies where the establishment of, or amendments to the articles of association are subject to the Ministry’s permission, such as banks, financial leasing companies, and asset management companies.

For meetings where the agenda covers capital increase or decrease, switching to or from the registered capital system, increasing the limit of the registered capital, changing the area of activity, merger and division and changing the company type, or meetings held abroad, the attendance of a Ministry representative is still obligatory.

3. Shareholders can apply for a Ministry representative to attend meetings in some cases.

Before the Amendment, members of a board of directors or other representatives of a company were able to request the attendance of a Ministry representative when it was not obligatory.

With the Amendment, in addition to the above, attendance of a Ministry representative can also be requested by shareholders or their representatives, provided that (i) the board of directors is absent or cannot reach the meeting quorum, and (ii) the general assembly meeting is exclusively for the election of members to the board of directors.

The petition for a Ministry representative should be signed by all of the shareholders (or their representatives) and should be notarized.

4. Preparing a list of attendees and forming a meeting chairmanship for a GAM is not obligatory for joint-stock companies with a sole shareholder.

5. Application for the attendance of a Ministry representative can also be made through the Central Registration System (MERSIS).

What does this mean for Turkish joint-stock companies?

With the Amendment, the procedure to convene GAMs and the provisions regarding the appointment of a Ministry representative have changed. It can be argued that procedures have been simplified and digitalized to ease the convening of GAMs. One exception to this is the notarization of shareholders' proxies that has been introduced to safeguard proof of representation. It’s advised for local and global clients who are shareholders or board members of a Turkish joint-stock company to review the changes before conducting a GAM.