Non-deliverable powers of the general assembly of joint stock companies

The general assembly, which is one of the mandatory organs of the joint stock company, is considered as the decision-making authority of the partnership. Article 407 of the Turkish Commercial Code regulates that partners can exercise their rights regarding company affairs at the general assembly. Shareholders attend general assemblies to gain information about the operation of the company. Based on this, it is possible to define the general assembly as the body of decision, information and exercise of rights.

The fact that the general assembly is the decision-making body gives the general assembly sovereignty. In addition, the general assembly does not work continuously. It is mandatory and sufficient for the general assembly to meet at least once a year. The general assembly is not an executive body. Therefore he is not responsible. Article 553 of the Turkish Commercial Code: "Founders, board members, managers and liquidators are responsible for the damage they cause to both the company, its shareholders and the company's creditors, if they violate their obligations arising from the law and the articles of association through their "fault". With the expression in the form, it determined the responsible persons in the joint stock company and excluded the general assembly.

The powers of the general assembly of joint stock companies are examined under separate headings, including non-delegable powers and limitations, below.

NON-DELIVERABLE POWERS OF THE GENERAL ASSEMBLY

Article 408 of the Turkish Commercial Code lists the inalienable powers of the general assembly. According to the article, these powers are;

a) Amendment of the articles of association.

b) Election of the members of the board of directors, determination of their terms, salaries and rights such as attendance fee, bonus and premium, decision on their discharge and dismissal.

c) Dismissal of the auditor by election, except for the exceptions stipulated in the law.

d) Making decisions regarding the financial statements, the annual report of the board of directors, disposal of annual profit, determination of dividends and earnings shares, and the use of reserve funds, including their inclusion in the capital or profit to be distributed.

e) Termination of the company, except for the exceptions stipulated in the law.

f) Wholesale sales of a significant amount of company assets.

In the first paragraph of the article, it is also stated that the general assembly has other non-delegable powers and are reserved. The non-delegable powers of the general assembly, other than those listed in the law, are;

1- Deciding on merger, division and type change.

2- In accordance with TCC 379/2, to authorize the board of directors so that the shares can be acquired or accepted as pledge in accordance with the provision of the first paragraph.

3- To take decisions on issues reserved in the law and the articles of association.

Paragraph 3 of the article stipulates that in a joint stock company with a single shareholder, the shareholder can exercise all the powers of the general assembly.

LIMITS OF GENERAL ASSEMBLY POWERS

Article 340 of the Turkish Commercial Code introduced the principle of mandatory legal rules. In accordance with this principle, the powers of the general assembly cannot be increased or decreased by stipulating articles of association that differ from legal regulations. The general assembly is only authorized to make decisions within the scope of the law. Decisions that are not expressly provided for otherwise in the law are mandatory.

As we stated above, the general assembly is not granted absolute decision-making authority. The general assembly must comply with the following restrictions when exercising its powers;

1- Powers of Other Organs and Persons

TTK 408/1. The article regulates that the general assembly can only take decisions on matters clearly stated in the law and the articles of association.

In parallel with this regulation, some powers specific to the board of directors and independent auditors are regulated in the law. In accordance with the provision of Turkish Commercial Code 408/1, the general assembly cannot use the powers granted to other bodies by law. As a matter of fact, in the justification of Article 375 of the TCC, it is stated that "Article 375, which shows the inalienable powers of the board of directors, is new. With this provision, in the Commercial Code, a functional distinction was made between the organs, equivalence in terms of power was accepted between the organs in terms of function, and on the other hand, the pure authority theory that the general assembly is omnipotent and equipped with the authority to make all decisions was rejected." Expressions are used.

375. In cases specified in the article, the authority belongs to the board of directors. The general assembly cannot use this authority. The Supreme Court of Appeals said, "The case is about the request for the annulment of the general assembly decisions, and the plaintiff claimed that the appointment of a general manager to the defendant company in the general assembly was a usurpation of authority and requested the annulment of this decision. According to Article 375/1-d of the Turkish Commercial Code No. 6102, which was in force on the date of the general assembly meeting in question, the appointment and dismissal of the directors and persons with the same functions and those with signature authority are among the inalienable and inalienable duties and powers of the board of directors." In this case, while the decision taken at the general assembly meeting in question regarding the appointment of a general manager to the defendant company should have been declared null and void, it was not correct to reject the case in this regard, on the grounds that the decision regarding the election of the general manager was in the same direction as the decision of the board of directors and that the request for annulment was not deemed appropriate since the general assembly is the highest decision-making body, and it required reversal. There is a decision as follows.

Similarly, the general assembly cannot make decisions in cases where the authority is given to independent auditors by law. For example, the year-end accounting audit is carried out by independent auditors.

2- Rights of Third Parties

The rights of third parties to the partnership cannot be violated unilaterally by the general assembly. Such a violation means a violation of people's acquired rights, which cannot be violated by law.

3- Minority Rights and Individual Rights

With Article 411 of the Turkish Commercial Code, certain rights have been granted to minorities. According to the law, shareholders who constitute at least one tenth of the capital, or one twentieth of the capital in public companies, are considered minorities. The minority has the right to add items to the agenda, to postpone the general assembly meeting, to postpone the balance sheet discussions. These rights constitute the limit of the general assembly's powers. The general assembly cannot limit these rights granted to shareholders by law. Otherwise, litigation may be initiated.

4- Privileged Shares

Some privileges may be granted in favor of some shareholders in the articles of association of a joint stock company. The law defines privilege as a superior right granted to a share in rights such as dividends, liquidation shares, priority and voting rights, or a new shareholder right not foreseen in the law. The legal basis for privileged shares is Article 487 of the Turkish Commercial Code. According to the article, "Some shares may be privileged with the first articles of association or by amending the articles of association."

Article 454 of the Turkish Commercial Code regulates the special assembly of privileged shareholders and determines the quorum for decisions to be taken on matters concerning privileged shares. If the decisions to be taken by the general assembly are harmful to the rights of privileged shareholders, these decisions are subject to the provisions of Article 454/3 of the Turkish Commercial Code. It must comply with the meeting and decision quorums specified in the article. If the quorum is not complied with, the decisions cannot be implemented.

As a matter of fact, in its decision numbered 11 HD 2019/3753, the Supreme Court of Appeals said, "As stated in Article 478 of the Turkish Commercial Code titled "Privileged Shares", some shares may be privileged with the first articles of association or by amending the articles of association. Privilege is a superior right granted to a share in rights such as dividends, liquidation shares, priority and voting rights, or a new shareholding right not foreseen in the law. Privileges listed in the law. It is not a restriction and is considered exemplary. When the pre-amendment version of the articles of association is evaluated, it is understood that group B shareholders are granted privilege rights regarding the representation of the company. This privilege is granted to group B shareholders and the rights of privileged shareholders are protected by Article 454 of the Turkish Commercial Code. If the decision of the company's general assembly regarding the amendment of the articles of association will violate the rights of privileged shareholders, this decision will be held in a special meeting of the said shareholders. "It will not be implemented and will not come into force unless it is approved by their decision." He stated as follows.

Yet in another Supreme Court decision, "According to Article 454 of Law No. 6102, if the decision of the general assembly regarding the amendment of the articles of association is in a way that violates the rights of the privileged shareholders, this decision cannot be implemented unless it is approved by a decision taken by the privileged shareholders in a special meeting to be held, in this case, the special assembly of the defendant company must be called to a meeting by the board of directors until one month after the date of announcement of the general assembly meeting subject to the case, and if this is not done, the privileged share It has been stated that the owners must file a lawsuit in the Commercial Court of First Instance in accordance with Article 454.