GENERAL ASSEMBLY MEETINGS OF INCORPORATED AND LIMITED COMPANIES

Since the Corona virus (Covid-19) manifests in all areas of life in this process, companies are of course unable to carry out their normal activities, and even whether a meeting can be held during this process has become a matter of discussion. The source of these discussions was the decision to postpone all meetings until the end of April, using the general expressions in the Presidential Circular No. 2020/3 published in the Official Gazette dated March 20, 2020 and numbered It started with the passing of the following points in his article;

"... In order to prevent the spread of the coronavirus COVID-19 (Coronavirus) epidemic, some measures were taken in terms of the board meetings of the companies, especially in this period when the company general assemblies were held intensively.

In this context, in accordance with the Turkish Commercial Code No. 6102 and the company contract, the ordinary general assemblies of joint stock and limited companies, which were previously called for meeting by the management bodies, were given the opportunity to be annulled by a decision to be taken by the management bodies, without waiting for the meeting of the general assembly to take a decision of postponement.

Pursuant to Article 1527 of the Turkish Commercial Code, in order to prevent an epidemic in companies using the electronic general assembly system and wishing to hold a general assembly meeting, to ensure that the meeting is held in a physical environment with the participation of minimum shareholders, shareholders' participation in the general assembly meetings in electronic environment without physically participating They are advised to use their discretion as to what they can provide.

In this context, measures have been taken to ensure that companies, which do not have provisions that allow the holding of board meetings to be held electronically in the company contracts or their articles of association, can hold the meetings they plan to hold in this period over "Electronic General Assembly Meeting System" and "Electronic Board of Directors System". "

1. According to these regulations, if Joint Stock Companies / Limited Companies do not hold their ordinary general assembly meetings within three months after the end of the activity period, will they face a sanction?

First of all, the circular issued by the Presidency is not superior to the laws in the hierarchy of norms. For this reason, first of all, although legal regulations are based on, the legal regulations should be evaluated together as they should complement each other. Articles 409 and 617 of the Turkish Commercial Code stating that the ordinary general assembly meeting should be held within three months after the end of the activity period are not mandatory provisions but are regulatory provisions.For this reason, no administrative, criminal, etc. sanctions will be faced due to the inability to hold a meeting within this time frame.

2. Are Incorporated Companies / Limited Companies prohibited from holding ordinary general assembly meetings according to these regulations?

In the statutory regulations, there is no obstacle to holding the ordinary general assembly meetings, which were announced before and the meeting date corresponds to March and April. Because even the regulation on profit distribution introduced by Law No. 7244 points out that general assembly meetings can be held. However, with the Circulars published by the Ministry of Internal Affairs, people under 20 and over 65 and people with chronic diseases should leave their residences; They are prohibited from walking around in open areas, in parks, and by restricting their travel by public transportation. For the shareholders who are within the scope of the prohibition, the situation may arise that they cannot use their legal right of representation due to their inability to attend the meeting and to send a representative. In such a case, the shareholder TTK Art. According to the 446/1-b clause, it may cause the decisions taken at the meeting to be invalid by filing an action for annulment.

In cases where a board decision regarding the meeting has not been taken yet or a decision has been made but not announced in the TTSG regarding the general assembly, it can be said that it would be more correct to postpone the meeting by acting on the letters of the Circulars and the Ministry of Trade, and at least the soundness of the decisions taken will not be risked. However, if a meeting is required to be held, the case of determination that the decision of the board of directors to call the general assembly to a meeting is invalid, based on the reasoning of article 391/1-c of the TTK and article 27 of the TTK, although there is no obstacle to the announcement; There is a risk of filing an annulment action stating that the decisions taken at the general assembly are invalid pursuant to the article 446/1-b of the TTK.

3. Can companies that do not contain a clear provision in their articles of association hold a general assembly meeting electronically?

The Ministry of Trade has made this possible with the letter of the General Directorate of Domestic Trade dated 20.03.2020 and numbered 53382221. However, the relevant TTK 1527/1. article, "Provided that it is regulated in the articles of association or in the articles of association, the board of directors and the board of directors can be held electronically in capital companies, or by the electronic participation of some members in a meeting where some members are physically present." and stipulated that there is a provision in the articles of association. Here, the letter of the Ministry is clearly against the TCC and it is absolutely necessary to act in accordance with the law.

Also, holding the meeting electronically does not provide any assurance; According to Article 9 of the Regulation on General Assemblies to be Held in Electronic Media in Joint Stock Companies dated 28.08.2012 and numbered 28395, it is necessary to open a physical meeting on the one hand and form the meeting chairmanship in general assemblies with electronic participation. In addition, shareholders who have never held an electronic meeting before also need electronic signature and holding a meeting will be a burden.

4. Can ordinary general assembly meeting be held in joint stock companies / limited liability companies by circulating the documents without meeting physically?

According to the 4th paragraph of Article 617 of the TTK, in limited companies, "Unless any partner requests an oral meeting, general assembly resolutions can also be made by obtaining the written approvals of the other partners to the proposal of one of the partners regarding the agenda item. Submission of the same proposal to the approval of all partners is a must for the validity of the decision." However, a similar regulation does not exist for joint stock companies. If all partners of a joint stock company approve this, a decision can be taken in this way in meetings where the Ministry representative is not obliged to attend.

5. According to these regulations, can the board of directors in joint stock companies / board of directors take decisions in limited companies?

Since the board of directors / directors of the company establishes all the business and transactions regarding the operation of the company, an assessment that it cannot take a decision in this context does not comply with the legal regulations. Because an opposite situation also runs counter to commercial operation. As a matter of fact, with the circular of the Ministry of Internal Affairs dated 16.03.2020 and numbered E.5361 on "Coranavirus Measures", it is stated that the executive management activities of Non-Governmental Organizations (Association, Foundation) are not restricted, and the board of directors / directors doing the executive works of the company It can be stated that he can make a decision.

6. In this process, can one-person Joint Stock Companies / Limited Companies take a general assembly decision?

Joint stock companies TTK 408/3 art. requirement; Limited companies are in TTK 616/3 Art. Accordingly, in joint stock companies / limited liability companies with one share, this shareholder has all the powers of the general assembly. In this context, in cases where the participation of the Ministry representative is not mandatory, the decision of the general assembly may be taken without the need for a meeting.

7. With the letter sent by the Ministry of Commerce and the provisional article 13 of Law No. 7244, should the principles such as not distributing profits for previous years and not exceeding 25% of the profit distribution for 2019 must be applied?

This decision notified by the Ministry of Commerce is in the nature of "recommendation" in terms of its legal effect.The authority to decide on dividends is one of the non-transferable powers of the general assembly in joint stock companies according to the 408/2-d provision of the TTK and in limited companies according to the 616/1-e clause of the TTK. Therefore, it is clear that the relevant letter of the Ministry of Commerce is against the law, in the face of this clear and mandatory provision of the Law.

In this regard, the following provisional article has been added to the Turkish Commercial Code No. 6102, effective as of April 17, 2020 by Law No. 7244;

"(1) In capital companies, it may be decided to distribute only up to twenty-five percent of the net profit for the year 2019 until 30/9/2020, previous year profits and free reserves cannot be distributed, and the general assembly cannot authorize the board of directors to distribute dividends in advance. The provisions of this paragraph shall not apply to the state, special provincial administrations, municipalities, villages and other public legal entities and companies in which more than fifty percent of the capital belongs to the public, directly or indirectly holding more than fifty percent of the capital.The President is authorized to extend and shorten the period specified in this paragraph for three months.

(2) If the General Assembly has made a decision to distribute dividends for the 2019 fiscal year, but the shareholders have not yet been paid or partial payments have been made, the payments for the part exceeding twenty-five percent of the net profit for the year 2019 are postponed until the end of the period specified in the first paragraph.

(3) The Ministry of Commerce is authorized to determine the procedures and principles regarding the implementation and the exceptions regarding capital companies within the scope of this article, by taking the opinion of the Ministry of Treasury and Finance. "

Even from the wording of the Provisional Article 13, it is understood that dividend distribution is among the inalienable powers of the General Assembly. In case of failure to comply with this provisional provision, according to the current legal regulations, 445 Art. According to TTK 446.md., an action for annulment can be filed for those who can open this case. specified. However, 447 Art. Accordingly, a lawsuit can be filed for the determination of the decision taken in the general assembly. The Ministry also does not have the authority to open this case. However, since the profit distribution will be in favor of the stakeholders in this process, such a problem will not be encountered unless they object. The Ministry of Commerce can file a termination case in accordance with the TTK 210/3. However, as long as there is no activity that harms the public order, the termination case to be filed is doomed to be rejected. As a matter of fact, dividend distribution constitutes a constitutional property right. With this legal regulation, property right is violated. With the current legal regulation, there is no situation that the Ministry can do at this point, but it is thought that the sanctions will be determined by the Communiqués to be issued regarding this in the following process with the third paragraph of the temporary article 13. If you do not want to take these risks, you will have to comply with the temporary article 13, following the letter of the Ministry.

REFERENCES

Ali PASLI, COVID-19 Salgınının Anonim ve Limited Ortaklık Yıllık Olağan Genel Kurul Toplantılarına Etkisi: Güncel Koşullar Sürerken Genel Kurul Kararı Alınabilir mi?,http://www.ticaretkanunu.net/covid-19-salgininin-anonim-ve-limited-ortaklik-yillik-olagan-genel-kurul-toplantilarina-etkisi-guncel-kosullar-surerken-genel-kurul-karari-alinabilir-mi/, Erişim Tarihi: 18.04.2020.

Presidential Circular, 20.03.2020, (https://www.mevzuat.gov.tr/MevzuatMetin/CumhurbaskanligiGenelgeleri/20200320-3.pdf).

Ministry of Interior Circular, 16.03.2020, (https://www.icisleri.gov.tr/81-il-valiligine-koronavirus-tedbirleri-konulu-ek-genelge-gonderildi).

Ministry of Interior Circular, 22.03.2020, (https://www.icisleri.gov.tr/65-yas-ve-ustu-ile-kronik-rahatsizligi-olanlara-sokaga-cikma-yasagi-genelgesi)

Ministry of Trade, General Directorate of Domestic Trade, Şirketlerin Genel Kurul Toplantılarına İlişkin Açıklama, 20.03.2020, (https://icticaret.ticaret.gov.tr/haberler/sirketlerin-genel-kurul-toplantilarina-iliskin-aciklama).

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