General assembly is the decision body of the joint stock companies in accordance with Turkish Commercial Code numbered 6102 ("TCC"), general assembly may take resolutions on matters explicitly stipulated in laws and the articles of association. Article 408/2 of the TCC lists non-assignable duties and authorities of general assembly, only general assembly may take resolutions determined under this article. General assembly can be convened ordinary or extraordinary; convention, agenda and call procedure of general assembly are regulated in detail under TCC.
Resolutions adopted by the general assembly have an essential impact on the shareholders or general assembly resolutions may cause liability of members of board of directors. Therefore, it is possible to apply 3 different legal remedies against the general assembly resolutions in accordance with the TCC. These three situations are the determination of non-existence, determination of nullity and annulment of the resolutions of general assembly.
Annulment of the General Assembly Resolutions of Joint-Stock Companies
Annulment Reasons
Persons listed under TCC have right to file a lawsuit for annulment of the general assembly resolutions, however in order to file a lawsuit for annulment certain conditions shall be occurred. Article 445 of TCC stipulates three situations that the annulment of the general assembly resolutions come to the agenda. According to Article 445 of TCC, an action for annulment can be filed against the general assembly resolutions which are contrary to the relevant law, provisions of the articles of association and the principle of good faith within 3 months from the date of the resolution in the commercial court of first instance in the place where the company headquarters is located.
3 months period determined under TCC is the latest term and this period starts from the resolution date of general assembly. A contrary provision regarding the 3 months period shall not be determined under articles of association, judge ex officio considers whether the period has expired or not.
Contradiction to law, which is one of the reasons of annulment, includes not only the contradiction to the provisions of TCC also the violation of relevant legislation. An action for annulment can also be filed against any general assembly resolution that is in breach of the articles of association or that renders one or more of the articles of association ineffective. An action for annulment can also be filed in the event of a situation contrary to the principle of good faith determined under Article 2 of Turkish Civil Code numbered 4721. It is aimed to protect the minority shareholders against the majority shareholders by making it possible to file an action for annulment due to breach of the good faith.
Persons Authorized to File an Action for Annulment
Article 446 of TCC lists the persons authorized to file an action for annulment, these persons are as following:
i. Any shareholder who attended the general assembly meeting and voted against the resolution subjected to the annulment and then had the dissenting opinion recorded in the general assembly minute
ii. Any shareholder, whether present or absent in the meeting or whether voted against the resolution or not, who claims that the general assembly meeting was not duly called or the agenda was not duly announced or unauthorized individuals have participated in the general assembly meeting in person or by proxy and cast votes; or the shareholder was unjustly prevented from participating in the general assembly meeting and voting; and the general assembly resolution has been adopted due to presence of the foregoing illegalities,
iii. Board of Directors,
iv. Each member of the board of directors who may be held personally liable in case of implementation of resolutions
According to Article 446 of TCC, shareholders present at the meeting shall record the dissenting opinion to the meeting minute in order to file an action for annulment. The Supreme Court has decided that the dissenting opinion shall be written in the minutes by the shareholders present at the meeting. According to the Supreme Court decisions, in the event that the dissenting opinion is submitted to the board president before the commencement of the meeting and the discussion of the agenda, the Supreme Court does not consider such dissenting opinion acceptable in order to file an action for annulment. Following the discussion of the relevant agenda, dissenting opinion should be written by the shareholders present at the meeting.
Even if the shareholders are not present at the meeting, the shareholders may also file an action for annulment. However, in this case call for the meeting should not be duly made, the agenda of the meeting should not be duly announced, unauthorized individuals have participated in the general assembly meeting in person or by proxy and cast votes or the shareholder should unjustly be prevented from participating in the general assembly meeting and voting and such illegalities should have an effect on the resolution of the general assembly. Article 414 of the TCC regulates the call and announcement procedure of the agenda for the general assembly.
In order for the shareholders who were not present at the meeting to file an action for annulment due to the above-mentioned reasons, these shareholders shall prove that these reasons were effective in adopting the resolution. If the general assembly resolution could not be adopted if the violation alleged by the shareholder did not occur, the shareholder may file an action for annulment. However, if the resolution can be adopted even if the violation does not occur, then the shareholder will not be able to file an action for annulment.
Apart from the shareholders, board of directors or each member of the board of directors who may be held personally liable in case of implementation of resolutions may also file an action for annulment.
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.