Turkish Commercial Code No. 6102 grants a number of specific rights to minority shareholders representing at least 10% of share capital in a non-public joint stock company, with the aim of protecting them against majority shareholders or company management. These rights, which might affect significant functions, can be briefly explained as follows:
- Minority shareholders may request the board of directors invite a general assembly meeting or request inclusion of an additional agenda item for the meeting agenda that the minority shareholders wish to be discussed during an upcoming general assembly meeting. If the request is rejected or not responded by board of directors within seven business days, the minority shareholders may apply to the court with the same request. This may be similar to the concept of shareholder proposals in other jurisdictions.
- During the general assembly meetings, minority shareholders may request that discussions concerning approval of financial tables and other related subjects – such as release of board members or dividend distributions –be adjourned for one month.
- In the case of any justified reason (g. doubts about the neutrality of the statutory auditor appointed by the general assembly), minority shareholders may request from the court a change in statutory auditor. To make this request, the minority shareholders must have voted against appointment of the auditor in the general assembly meeting, had their opposing votes recorded in the meeting minutes and been shareholders of the company for at least three months prior to the date at which the appointment was made.
- If the general assembly rejects a request by a minority shareholder re to appoint a special auditor for the clarification of questionable matters, the minority shareholder may apply to the court with the same request.
- Minority shareholders may also apply to the court requesting dissolution of the company, but this requires a justified reason. In such a case, the court, at its own discretion, may rule in favor of dissolution of the company as requested by the minority shareholders, or may terminate the shareholdings of the minority shareholders and require payment of market value of the shares to themselves – or any other equitable solution. This may be similar to the concept of minority shareholder dissolution rights in other jurisdictions.
- A minority shareholder may also demand the company has issue share certificates and deliver them to all shareholders.
- The Board of directors, company auditors and founding shareholders cannot be released from the liabilities with respect to incorporation and company capital increases unless four years have passed since the incorporation or the particular capital increase. Following the lapse of such four-year period, a release may only be validated upon the approval of the general assembly. However, a release cannot be granted if minority shareholders vote against such release. The minority shareholders thus also have the right to block such a release.
*Lowenstein Sandler LLP thanks the attorneys at ELIG Gürkaynak Attorneys-at-Law for their contribution. Lowenstein Sandler LLP does not practice law in the Republic of Turkey.