The body of Joint Stock Companies (A.Ş.) and Limited Liability Companies (Ltd. Şti.) which the shareholders may use their rights related to the company, is to general assembly. The General Assembly may have resolution for all issues stated in the codes and the articles of association. According to the Turkish Commercial Code, the following resolutions can be taken only from the general assembly and it cannot delegate the authority to the other bodies of the company.

>Amendment in the articles of association,

>Electing the management board member, stating the duty term, making a decision on whether the honorarium, premium, bonus etc. will pay to the members or not, if it will be paid, determine the amount, making a decision related to the acquittance of the board, dismissal of the board members,

>Electing the auditor with the exceptions regulated in the Code,

>Making a resolution whether the financial statements, the annual activity report will be accepted or not, making a restriction related to the dividend, whether the dividend will pay to the shareholders or not, if it will be paid, determine the amount, making a resolution whether the reserve fund will be used, including whether it will be added to the capital or dividend, or not,

>Dissolution of the company with the exception regulated in the Code,

>Wholesaling the substantial amount of the company assets.

The Cancellation of the General Assembly Resolution In Which Situations the Cancellation Case may be filed?

Within the 3 months from the resolution date, in the commercial courts where the headquarter of the company is located, the cancellation case may be filed about the general assembly resolution of which are against;

>The Code,

>The Articles of Association,

>Good faith,

Who may file the Cancellation Case?

• The shareholders who attend the general assembly and give the negative vote to the resolution and make it to write to the minutes,
• Whether they attend the general assembly or not, and whether they give the negative vote or not, the shareholders who claimed that they have not noticed legally or the agenda of the assembly have not delivered, (e.g., the general assembly date and agenda have not been noticed in the Turkish Trade Registry Gazette, the general assembly date and agenda have not been sent to the shareholders by return receipt requested mail etc.) also claimed that the people who don’t have the authority to attend the general assembly or their representative and let them vote illegally,
• The board of directors in joint stock companies; the board of managers in limited liability companies,
• Each of the board member or manager if the execution of the resolution will bring their private responsibility.

Examples of which the Cancellation Case may subject to;

We stated below some of example circumstances that the cancellation case may be filed for:

Resolutions which don’t comply with the quorum

Resolutions which don’t comply with the quorum stated in the Code or the Articles of Association, also don’t comply with the special quorum for the amendment of Articles of Association stated in Turkish Commercial Code Art. 421, may be subject to the cancellation case.

E.g.,

• If the resolution is taken without the majority of the affirmative vote of the attendee shareholders or their representatives,
• If the resolution that the company’s file of operation has completely changed, is taken without the %75 affirmative vote of the whole capital,
• Issuing the privileged shares without the %75 affirmative vote of the whole capital,
• Moving the company abroad without the %100 affirmative vote of the whole capital, etc.

Resolution related to the Dividend, the Liquidation Dividend

According to the established case-law of Supreme Court in Turkey, resolution on whether the dividend from the period income or free reserve funds, will be paid to the shareholders or not, determining the amount if they will be paid, are considered as right to manage. It means these all are under the initiative of the general assembly of the company. Therefore, the general assemblies of the companies don’t have to take the resolution on paying the dividend to the shareholders.

But in case the resolution on not to pay the dividend to the shareholders or the determining the dividend less than the previous period, are taken (e.g., the company general assembly have taken the resolutions on paying the dividend in the last five periods, then some of the shareholders fall into dispute, after the dispute, if the shareholder who are the majority take the resolution on not to pay the dividend to make the shareholders who are the minority not to be paid anything from the company) if this resolution can be provided that is against the good faith, it can be the subject of the cancellation case.

About the resolution on liquidation dividend will be paid or not, determining the amount if it will be paid, the above-mentioned circumstances are also valid.

Resolution related to the Honorarium, Fee, Premium, Bonus

The above-mentioned circumstances related to the dividend are also valid for the honorarium, fee, premium, bonus to be considered to pay to the board members or the managers. The general assemblies of the companies have right to take resolution whether the honorarium, fee, premium, bonus will be paid to the board member or the managers or not, determining the amount if it will be paid. But this resolution should not be the against of good faith, too.

Failure on Notice Procedure

If the all shareholders or their representatives of the company attend and none of all has the objection, the general assembly may be arranged without noticing. But if this attendance condition cannot be ensured, the company should follow the notice procedure regulated in the Turkish Commercial Code.

The date, the hour and the agenda of the general assembly should be noticed on the company website and with Turkish Trade Registry Gazette. The term between the notice date and the assembly date, except the notice date and the assembly date, should be at least two months. Also, the gazette that the date, the hour and the agenda of the general assembly is noticed, should be sent to the shareholders by return receipt requested mail.

If the date, the hour and the agenda of the general assembly is not noticed with Turkish Trade Registry Gazette and on the company website, and if the gazette was not sent to the shareholders by return receipt requested mail, the general assembly resolutions could be the subject of the cancellation case.

Not allowing Shareholders to examine Company Balance Sheets and Annual Reports

At least 15 days before the general assembly date, financial statements, the annual activity reports, the company balance sheets, dividend distribution proposals should be kept ready for the examining of the shareholders in the headquarter of the company.

If the shareholders are not allowed to examine the above-mentioned documents in the meantime, the resolutions of this general assembly can be subject to the cancellation case.

The Nullity of the General Assembly Resolution

The resolutions on

>Limiting or abolishing the shareholders’ rights to attend the general assembly, to file a suit against the resolutions, right of vote and other inalienable rights regulated in the Code,

>Limiting the shareholders’ rights to demand information, to examine and audit, except to the extent permitted by the Code,

>Disrupting the principal structure or being against principles of capital maintenance

are null.

E.g., in case the amendment an article in the articles of association such as; “The general assembly will be made without noticing to the shareholders” or “The shareholders are not allowed to examine the financial statements, balance sheets” or “Under no circumstances, the reserve funds are not allocated.” Could be the subject to the nullity case.

Suspension of the Execution of the General Assembly Resolution

If the general assembly resolution is subject to the cancellation case or nullity case, the execution of the resolution can be suspended after receiving opinion of the board members or the managers.

The Legal Effect of the Resolution

If the court takes the resolution on cancellation or nullity of the general assembly resolution, this would affect the shareholders after finalization of the decision. If the decision is finalized, the board members or the managers should register this decision to the trade registry and put this on the website.

The Results if the Cases are opened with Bad Faith

If it is proved that the cancellation case or the nullity case are opened with bad faith and the company incurs loss due to the cases, the plaintiffs would be jointly and severally liable from the loss.