Turkish Commercial Code (TCC) numbered 6102 pays serious attention to the rights of minority shareholders and regulates their rights in detail compared to the former TCC numbered 6762. The aim of this work is to sum up these rights.
Minority Shareholders under TCC
Minority shareholders are defined as the shareholders that hold at least 10% of the share capital of a private company and 5% of the share capital of a public company. Although there is not an upper limit explicitly defined in law, it is accepted that the shareholder holding 51% or more of the share capital cannot be considered as a minority shareholder due to articles of TCC regarding the controlling shareholder.
With this regard, rights of the minority shareholders under TTC may be summarized as below:
- Right of being represented on board : According to article 360 of TCC, minorities may be granted right to be represented on Board of Directors (“BoD”) by way of being appointed as a BoD member or presenting a candidate for BoD provided that it is accepted in the Articles of Association of the company.
- Calling a general meeting and including an item on the agenda: Article 411 of TCC sets forth that minority shareholders can request from BoD for General Assembly (“GA”) to be convened showing the reasons and the agenda in written, or if the GA will already to be convened, they can request to include an item to the agenda.
- Postponement of the deliberations of financial statements: The deliberations of financial statements and related matters can be postponed for a month by the decision of the chairman of the meeting, without need to having a GA resolution upon the demand of the minority shareholders.
- Right to demand an independent auditor: Each shareholder including minority shareholders, have a right to demand an independent auditor during GA meeting to clarify certain matters even if it is not included on the agenda in case that the right to demand information was failed.
- Issuance of share certificates: Registered share certificates shall be issued and delivered to the right owners upon a request of minority shareholders.
- Right to request dissolution of the company: In case of just causes, minority shareholders can request the dissolution of the company from the court. The court may decide that the plaintiff be paid the actual value of his/her shares and be dismissed from the company or may decide for some other suitable solution.
- Preclusion of the release of the founders, BoD members and auditors: The minority shareholders are entitled to preclude the release of founders, board members and auditors from their liabilities due to establishment of the company and capital increase. Pursuant to the article 559 of TCC, the GA held at least four years after from the establishment is required to release the above-mentioned if only minority shareholders do not vote against the aforesaid resolution.
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Vedia Nihal Koyuncu
Attorney at Law, LL.M.