ANALYSIS OF THE INFLUENCE OF SHAREHOLDERS ON GENERAL ASSEMBLY DECISIONS IN JOINT STOCK COMPANIES

The convening of general assemblies in joint stock companies, the procedure for calling general assemblies, and other important issues have been examined in our previous articles. This article examines whether the mere absence of a shareholder from a general assembly meeting is sufficient to invalidate the general assembly meeting and the decisions taken therein.

  1. A)ANALYSIS OF THE EFFECT IN THE CONTEXT OF A SHAREHOLDER CLAIMING INVALIDITY

Under Article 446-1-b of the Turkish Commercial Code, the condition of being “effective in the adoption of the general meeting resolution” is required for persons who may file an action for annulment, and merely failing to attend the meeting or the absence of a proper notice does not result in the annulment of the general meeting resolution.

TTK Article 446: “b) Whether present at the meeting or not, whether they voted against or not; if the notice was not given in accordance with the procedure, if the agenda was not announced as required, that persons or representatives without the authority to participate in the general meeting attended the meeting and cast votes, that participation in the general meeting and casting of votes were unjustly permitted, and that the aforementioned irregularities had an effect on the adoption of the general meeting decision, shareholders who claim that the general meeting decision was invalid,”

In accordance with the established case law and doctrinal opinions of the 11th Civil Chamber of the Supreme Court, even if a shareholder who claims that the meeting was not properly convened may request the annulment of the general assembly decision, the importance of the shareholder’s influence on the general assembly decision has been emphasized. In accordance with the relevant decisions, it has been ruled that the mere fact of an irregular call does not constitute grounds for the annulment of the general assembly decision, that good faith must be taken into account, and that the importance of the shareholder who filed the lawsuit participating in the decision must be considered.

Supreme Court of Appeals 11th Civil Chamber, Case No. 1998/2468, Decision No. 1998/4079, Date: 01.06.1998

“…Although the mere fact that a partner was not duly summoned to the general assembly meeting gives him the right to file a lawsuit for the annulment of the decisions taken at the general assembly, the irregular summons does not in itself constitute a reason for the annulment of the general assembly decisions. The plaintiff partners in this case also have the possibility of having the general assembly decisions annulled, provided that they claim and prove that they are contrary to the law, the articles of association, and the rules of good faith…”

Supreme Court of Appeals 11th Civil Chamber. E. 2011/15969 K. 2013/5736 T. 25.3.2013

“…if the partner who was not properly summoned to the meeting does not attend the meeting, and their absence does not affect the quorum or decision-making process (regardless of whether they hold a minority share), then the failure to properly summon that partner does not constitute a ground for annulling the general assembly decision, in the case in question, the general assembly decisions were taken in accordance with the meeting and decision quorums, and even if the invitation to the meeting and the announcement of the agenda were contrary to the law from the plaintiff’s point of view, the general assembly decisions cannot be annulled for this reason, …”

Supreme Court of Appeals 11th Civil Chamber, Case No. 2013/6533, Decision No. 2013/22508, Date: 10.12.2013

“… In accordance with the established case law of our Chamber, even if the general assembly was convened irregularly, the general assembly decisions cannot be annulled solely on this ground; it must also be claimed and proven that the decisions taken are contrary to the law, the articles of association, or the rules of objective good faith.Since procedural irregularity in the call only gives the right to file an action for annulment, …..”

Supreme Court of Appeals 11th Civil Chamber E. 2014/8853 K. 2014/16232 T. 22.10.2014

“… An irregular call entitles a partner who was not present at the meeting to file a lawsuit for the annulment of the general assembly decision, and it must be proven that the decisions taken are contrary to the law, the articles of association, and the principles of good faith. An irregular call alone does not require the annulment of the general assembly decision. …”

Supreme Court of Appeals 11th Civil Chamber E. 2014/326 K. 2014/13491

“… the irregularity in the call alone does not result in the annulment of the decisions taken, but only gives the partner the right to file an annulment action, since the date of the meeting was notified to the plaintiff one day before the meeting, in accordance with Article 538/4 of the Turkish Commercial Code, the irregularity in the meeting notice grants the plaintiff partners the right to file an annulment action; however, for the annulment of the decisions made at the meeting, there must be an irregularity that renders the decision contrary to the law, the articles of association, and the rules of good faith, and that results in the decision being deemed null and void, …”

Supreme Court of Appeals 11th Civil Chamber, Case No. 2015/10277, Decision No. 2016/5229, Date: 9.5.2016

“… in the event of the contrary, the decisions sought to be annulled must have been adopted by unanimous vote

%10 of the shares, the plaintiff’s participation in the general assembly cannot influence the decision, therefore the irregularity of the invitation alone does not result in the annulment of the decisions, …”

  1. B)RULE OF EFFECT AND CAUSAL LINK

The rule of effect and causal link is a concept accepted in doctrine and teaching for the annulment of general assembly decisions and is applied within the scope of Article 446/1-b of the TCC. With regard to general assembly decisions, the rule of effect and causal link require that the acts constituting the violation be effective in the formation of the general assembly decisions. The effect rule and causal link, within the scope of Article 446/1-b of the Turkish Commercial Code, indicate that the party claiming inconsistency must have been effective in the adoption of the decision and must establish the causal link with the decision.

The party claiming the inconsistency must prove that there is a causal link between the alleged inconsistency and the general assembly decision. It must be examined whether the participation or non-participation in the general assembly had an effect on the decision.

In the decision below, the Court of Cassation ruled that even if participation was contrary to the general assembly decision, the remaining votes were still legally sufficient to implement the decision, and that if it was understood that the votes cast, regardless of whether the party participated or not, did not affect the decision, the request for annulment must be rejected.

Supreme Court of Appeals, 11th Civil Chamber, E. 2009/9025, K. 2011/2462, T. 08.03.2011

“ … If it is understood that the vote of the partner who was deprived of the right to vote did not affect the decision, the request for annulment must be rejected…… When the votes of the aforementioned persons are excluded, the votes in favor of H. R. P. and S. P. remain. In this case, the quorum required for acquittal is met, and the votes of the members of the board of directors are not effective for the outcome. The court failed to address this point and ruled that a board member cannot vote by proxy, which was deemed incorrect and necessitated the reversal of the decision…”

 

Year: 2025

Application: Analysis Of The Influence Of Shareholders On General Assembly Decisions In Joint Stock Companies

Lawyers: Mehmet Said Sarıbaş & Bilal Akbaba

E-mail: info@saribasakbaba.av.tr

Website: saribasakbaba.av.tr