I. Introduction
Since share certificates are movables, whether registered or bearer, usufruct rights may be established on them. The fact that a share is attached to a deed does not change the fact that the subject of the usufruct is a right; it is only important in terms of the formal procedures required to establish a usufruct right on the share.1 In the event that a share is attached to a deed, the act of disposal shall take place in accordance with the rules regarding the transfer of commercial papers.2
In this respect, pursuant to Article 795 of the Turkish Civil Code numbered 4721 (‘Civil Code') and Article 647 of the Turkish Commercial Code numbered 6102 (‘Commercial Code'), in order to establish usufruct rights on bearer share certificates, the possession of the certificates must be transferred to the usufructuary. However, the transfer of bearer share certificates shall be effective for the company and third parties only upon the notification to be made to the Central Registry Agency by the transferee (Commercial Code, Article 489).
Unless otherwise stipulated in the law or articles of association, registered shares may be transferred without any restriction (Commercial Code, Article 490). For registered share certificates, pursuant to Article 795 of the Civil Code and Article 647 of the Commercial Code, the provisions relating to promissory notes shall apply. Therefore, they shall be transferred subject to the provisions regarding the transfer of promissory notes (emre yazılı senet). Hence, in order to establish usufruct rights on registered share certificates, the endorsement and the transfer of possession must be applied together (Commercial Code, Article 490/2). It should not be forgotten that including the phrase ‘for the purpose of usufruct' in the endorsement prevents the transfer of the deed against third parties in good faith.3 However, there is no need for endorsement and transfer of possession if the usufruct right arises from the law.4
These formal requirements are important. Because, unless it is proved that the share has been duly transferred or a usufruct right has been established, the transferee and the usufructuary cannot be recorded in the share ledger (Commercial Code, Article 499/2).
II. The Problem of Registration In The Share Ledger
The share ledger is a commercial book (Commercial Code, Article 64/4). In order to assert the usufruct right against the joint stock company, registration in the share ledger is required (Commercial Code, Article 499/1). In the continuation of the relevant article, it is stated that only the person registered in the share ledger shall be recognised as the usufructuary in relations with the company (Commercial Code, Article 499/4). This provision means that even if the usufruct right exists and is legally valid, it will not be recognised by the company unless it is registered in the share ledger. This provision is meaningful in terms of keeping, opening and closing approvals and storage of the share ledger; otherwise, it does not affect the special character of the share ledger and does not confer a constitutive character to the entries made in the share ledger.5
III. Limiting Usufruct Right on Registered Share Certificates
While the transfer of bearer shares is not restricted, pursuant to Articles 491 et seq. of the Commercial Code, legal and contractual restrictions may be imposed on the transferability of registered shares. In a joint stock company, the principle is that registered shares may be freely transferred. The only exception to this principle stipulated in the Commercial Code is registered shares for which the full price has not been paid.
Accordingly, if the transfer of registered shares is not realised through a legal way such as partition of the inheritance (mirasın paylaştırılması) or execution by force of law (cebrî icra), the registered shares that have not been fully paid can only be transferred with the approval of the company (Commercial Code, Article 491/2). Therefore, when the transfer of registered share certificates is subject to the approval of the joint stock company, usufruct rights cannot be established on the registered share certificates.6 In such a case, the board of directors will have to authorise the transfer of possession before the usufruct right is established for these deeds. This provision is a guarantee for the unpaid share price.7 The application for approval may be rejected only if the ‘transferee's ability to pay is doubtful' and ‘the security requested by the joint stock company is not provided'.8
On the other hand, the articles of association may stipulate that registered shares may only be transferred with the approval of the company (Commercial Code, Article 492). The Commercial Code only sets forth the principle. In other words, the principle is that the restriction may be made by the articles of association and the transfer is subject to the approval of the company.9 If the articles of association do not impose such a restriction, the rule of free transfer of shares shall apply.10 What it means by such a limitation is that the company may refuse the establishment of a usufruct right on the same grounds as it may refuse the transfer of ownership of the share. The reason why the usufruct right is regulated by an explicit provision is that the usufructuary has the right to vote.11 Another point is that in joint stock companies where share transfer restrictions (bağlam hükümleri) are stipulated, it may be agreed that the representative may only be one of the shareholders. The purpose is to prevent circumvention of the legal or articles of association share transfer restrictions. This is because, in the event that the transfer of a registered share certificate is rejected by the board of directors, the shareholder may appoint the rejected transferee as a representative, enabling him to attend the general assembly meetings and vote. Therefore, in practice, it may be acceptable for the voting representative to be a shareholder without any provision in the articles of association.12
IV. The Rights of The Usufructuary on Registered Share Certificates
In a broad sense, when the rights of the usufructuary are considered, these rights can be divided into property rights and rights to participate in management. The usufructuary's rights to participate in the management can be considered as the right to vote and the right to file an action for annulment, the right to attend the general assembly meetings, the right to receive information and the right to audit. In this article, the right to vote and the right to attend the general assembly meetings and the right to file an action for annulment are discussed.
V. Right to Vote
If there is a usufruct right on a share, the voting right shall be exercised by the usufructuary, unless otherwise agreed. However, the usufructuary is liable to the shareholder for his/her failure to act with just (hakkaniyet) to the interests of the shareholder (Commercial Code, Article 432/2). Hence, the usufructuary must use his/her right with due diligence (Civil Code, Article 803/2).
VI. Right to Attend General Assembly Meetings
As mentioned above, it is regulated that when a usufruct right is established on a registered share certificate, the right to vote is also granted to the usufructuary by law. In this case, the person attending the general assembly meetings must certify that he/she is the beneficial owner.13
VII. The Right to File an Action For Annulment Against General Assembly Meetings
In joint stock companies, the principle of majority is valid for the adoption of resolutions (Commercial Code, Article 418, 421). Unlike nonexistence and nullity, a lawsuit must be filed for the annulment of decisions. If the court decides to annul the decision, the decision will be null and void.14 It is stated that the right to file an action for annulment belongs to the shareholder (Commercial Code, Article 446).
It is mentioned above that the doctrine accepts the view that the right to attend the general assembly meetings, as a natural consequence of the right to vote, should be granted to the usufructuary. However, it is controversial whether the right to file an action for annulment against the decisions of the general assembly should be granted to the usufructuary. Because the shareholder who has bare ownership of the share may also attend the general assembly. The Court of Cassation stated that "since the right to vote in the board belongs to the usufructuary, the right to file an action for annulment against the decisions of the general assembly should also belong to the usufructuary" in one of its decisions.15 It is also accepted in the doctrine that attending in general assembly meetings and using their right to vote shall not grant them the right to file an action for annulment against the decisions of the general assembly, since this right is granted to the shareholders pursuant to Article 446 of the Commercial Code.16 However, there are opinions in the doctrine that this right may be granted to the usufructuary in cases where the shareholder does not attend the meeting,17 or that the right to file an action for annulment shall belong to the shareholder, considering that the right to file an action does not arise from the right to vote, but the usufructuary may also be granted the right to file an action for annulment due to its legal interest.18 Because, it is declared that there is a voluntary joinder of parties between the holder of the bare ownership and the usufructuary, that it is not right to deprive the usufructuary, who can exercise shareholder rights such as the right to attend the meetings and the right to vote, from the possibility of filing an action for annulment, and that there is a common interests of both the shareholder and the usufructuary.19 However, it should not be forgotten that, in any case, in order to file an action for annulment, the usufructuary or the shareholder must have their opposition/reservation recorded in the minutes.20
Footnotes
1. Esra Cenkci, (2021), “Fracture of Shareholders' Rights to Participate in Management in Joint Stock Company: Establishment of Usufruct on the Share”, 70 Annales de la Faculté de Droit d'Istanbul.
2. HGK., E. 2013/2101 K. 2014/222, T. 5.3.2014.; Reha Poroy ve diğerleri, (2019), “Ortaklıklar Hukuku II”, 14. bası, İstanbul: Vedat Kitapçılık, s. 126, 140.
3. Esra Cenkci, s. 56.
4. Ticaret Kanunu, m. 490 Gerekçesi.
5. Yavuz Akbulak, (2016), “TTK Işığında Anonim Şirketlerde Pay Senetleri”, Sayı 1, Ankara Barosu Dergisi, s. 522.
6. Reha Poroy ve diğerleri, s. 140.
7. Yavuz Akbulak, s. 510.
8. Ticaret Kanunu, m. 491/2 Gerekçesi.
9. Şafak Narbay, (2012), “6102 Sayılı Yeni Türk Ticaret Kanununa Göre Anonim Ortaklıkta Pay Ve Pay Senetlerinin Devri”, Erzincan Binali Yıldırım Üniversitesi Hukuk Fakültesi Dergisi, Cilt XVI, Sayı 3-4, s. 217.
10. Yavuz Akbulak, s. 511.
11. Ticaret Kanunu, m. 492 Gerekçesi.
12. Hasan Pulaşlı, (2022), “Şirketler Hukuku Genel Esaslar”, 8. Baskı, Ankara: Adalet Yayınevi, s. 580.
13. Yavuz Akbulak, (2021), “Anonim Şirket Pay Sahiplerinin Genel Kurula Katılma Hakkı”, Lexpera Blog.
14. Mehmet Bahtiyar, s. 209.
15. 11. HD., E. 1981/2243 K. 1981/2678, T. 28.05.1981.; 11. HD., E. 2002/12676 K. 2003/4234, T. 29.04.2003.
16. Hasan Pulaşlı, s. 368.
17. Reha Poroy ve diğerleri, (2021), “Ortaklıklar Hukuku II”, 15. bası, İstanbul: Vedat Kitapçılık, s. 609.
18. Yavuz N. Okçuoğlu, (1985), “Anonim ve Kooperatif Şirket Genel Kurul Kararlarının İptali İçin Gerekli Olan Muhalefet ve Muhalefetin Tutanağa Geçirtilmesi (TTK m. 381/1 ve Koop K. m. 53/1)”, Ticaret Hukuku ve Yargıtay Kararları Sempozyumu II, 11-12 Ocak 1985, Ankara, 1985, s. 280-281.
19. Erdoğan Moroğlu, s. 265-266.
20. Erdoğan Moroğlu, s. 267.
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