Ordinary general assembly meeting in joint stock companies is a meeting held to discuss and decide on the election of company organs, financial statements, annual report of the board of directors, the method of profit utilisation, the determination of the rates of profit and dividend shares to be distributed, the release of the members of the board of directors and other issues that deemed necessary. In this article, the procedures and principles regarding the ordinary general assembly meeting will be examined.
1. Relevant Legislation
The procedures and principles of the ordinary general assembly meetings are regulated in Articles 409 et seq. of the Turkish Commercial Code No. 6102 (“TCC”) and the “Regulation on the Procedures and Principles of the General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Trade to be Present at These Meetings” (“Regulation”) published in the Official Gazette dated 28.11.2012 and numbered 28481.
2. Time of Meeting
The ordinary general assembly meeting shall be held within 3 months following the end of each financial year. Accordingly, the ordinary general assembly meeting must be held within the first 3 months of the year for companies that accepts the calendar year as their financial year.
3. Place of Meeting
Unless otherwise provided in the articles of association, ordinary general assembly meetings shall be held within the boundaries of the local administrative unit where the head office of the company is located. If the address of the meeting is not specifically stated in the articles of association, the authority to determine the address of the meeting belongs to those who call for the meeting.
In order for the meeting to be held in another place outside the borders of the local administrative unit where the company’s head office is located or abroad, this must be clearly regulated under the articles of association.
The place of the meeting shall be specified in the call to meeting in a correct, comprehensible and detailed manner.
4. Call to Meeting
The general assembly shall be called for a meeting by the board of directors, even if the board’s term of office has expired. In the event that the board of directors is not present or cannot convene continuously, or it is not possible to constitute a quorum, the shareholder who obtains permission from the court pursuant to Article 410/2 of the TCC may call the general assembly to convene.
The general assembly meeting shall be called by means of an announcement published in the articles of association, on the websites of companies if the company is obliged to open a website, and in any case in the Turkish Trade Registry Gazette.
Lastly, all shareholders or their representatives may convene as a general assembly meeting without complying with the call procedure, unless one of them raises an objection. Furthermore, all shareholder may adopt resolutions as long as such quorum is present during the meeting.
5. Agenda
The agenda is determined by the organ calling the general assembly meeting. Without prejudice to the legal exceptions, the matters that are not included in the agenda cannot be discussed and resolved at the general assembly meeting. The matters to be included in the agenda of the ordinary general assembly meeting are regulated in Article 13 of the Regulation as follows:
– Opening of the meeting and formation of the meeting chairmanship,
– Reading and discussion of the annual report prepared by the Board of Directors,
– Reading of auditor’s reports,
– Reading, discussion and approval of the financial statements,
– Release of the members of the board of directors,
– Determination of the utilisation of the profit and the rates of profit and profit shares to be distributed,
– Determining the remuneration and the rights of the board members such as attendance fees, bonuses and premiums,
– If there has been a vacancy in the memberships of the board of directors during the activity year and an appointment has been made by the board of directors, approval of the appointment by the general assembly,
– Election of the board members whose terms of office have expired, and if their terms of office are not specified in the articles of association, determination of their terms of office,
– Selection of the auditor,
– Other matters to be deemed necessary (These matters should be determined in advance and clearly written on the agenda. There should not be an item in the agenda as “Other matters to be deemed necessary”.).
6. Meeting and Decision Quorum
The general assembly shall convene with the presence of the shareholders representing at least one quarter of the capital, except where the law or the articles of association stipulate a higher quorum. This quorum must be maintained throughout the meeting. Decisions shall be taken by the majority of the votes present at the meeting.
Several cases where a higher quorum is stipulated in the law are as follows:
Amendment of the articles of association: General assembly resolutions regarding the amendment of the articles of association shall convene with at least half of the capital. Decisions are taken with the majority of the votes present at the meeting.
Capital decrease, issuance of the privileged shares, complete change of the company’s field of activity, limitation of transfer of registered shares, dissolution and liquidation: The general assembly meeting, which includes discussions on the aforementioned matters, shall be convened by the shareholders representing at least 75% of the capital, and such resolutions shall be adopted by the affirmative votes of the shareholders constituting at least 75% of the capital.
The imposition of obligations and secondary obligations to cover balance sheet losses, relocation of the company’s head office abroad: The aforementioned resolutions shall be adopted by the unanimous vote of the shareholders representing the entire capital of the company.
7. Preparation and Registration of Meeting Minutes
The meeting minutes shall include the shareholders (or their representatives), the shares held by them, their groups, numbers, and nominal values, the questions asked during the general assembly meeting, the answers given, the resolutions adopted, and the number of affirmative and negative votes given for each resolution. The resolutions adopted at the meeting shall be stated in the minutes in a clear manner to avoid any doubt, by showing the totals of the affirmative and negative votes.
The minutes shall be signed by the chairmanship of the meeting. In companies with a single shareholder, the shareholder or his/her representative present at the meeting must also sign the meeting minutes.
The board of directors shall submit a notarised copy of the minutes to the Trade Registry Office, and register and announce the matters subject to registration and announcement. The general assembly process is completed upon submission of the meeting minutes to the Trade Registry Office.