In order for a resolution to be taken at the General Board of limited companies, a sufficient number of partners must attend the meeting and a sufficient number of partners must vote positively. Said quorums are called meeting quorum and resolution quorum. The minimum number of votes required for a General Board resolution in a limited company may be envisaged in the Law or in the company’s Articles of Association. In case the minimum quorum envisaged in the Law is not met, the relevant General Board resolution will be imposed a non-existence sanction and will not be effective. If the meeting and resolution quorum envisaged in the Law is less than the one envisaged Articles of Association, and this number is not met in the General Board resolution, then the disregard of the General Board resolution will be possible.
In this bulletin, the meeting and resolution quorum required for General Board resolutions in limited companies are examined.
1) General Quorums
A minimum meeting quorum for a General Meeting has not been envisaged in the law. More clearly, even if only one partner is present at the meeting, that person can take decisions on the issues on the agenda. This provision facilitates decision making in limited companies. There are regulations on resolution quorum in the Turkish Commercial Code. Resolution quorums should be analyzed in two subtopics: general quorums and special quorums. Accordingly, the resolution quorum that will be valid in cases where a higher quorum is not stipulated in the Law is called general quorum. Special quorums, on the other hand, are the quorums that will be valid in the General Board resolutions expected to be accepted with a larger number of votes, because they are considered more important by the legislator.
Unless otherwise stipulated in the law or in the Articles of Association, all General Board resolutions, including election decisions, are taken with the majority (absolute majority) of more than half of the votes represented at the meeting. The general quorum means the simple majority. For example, in order to take the following resolutions in the General Board of limited companies, it is sufficient for more than half of the attendees to vote positively;
- In the resolutions to be made on the matters that the General Board is authorized by law or contract, or on the matters submitted by the directors to the General Board,
- In the election and dismissal of directors,
- In the exoneration of directors,
- In determining the wages of directors,
- In the approval of the activities of the directors,
- In the appointment and dismissal of auditors,
- In the election and dismissal of commercial agents,
- In the approval of year-end financial statements and annual activity reports,
- In the decisions to be made about the profit share,
- In the determination of gain margins
- In the approval of the capital share transfers,
- In the approval for the establishment of a mortgage on the capital shares,
- In the authorisation of the manager to acquire the company’s own shares or approval of this authority,
- In issuing internal directives about ancillary performance obligations,
- In cases where the approval of the General Board is sought, the absolute majority, which is the general quorum, is sufficient for the decision to be valid.
It is important to point out that by making a provision in the company’s Articles of Association, it is possible to determine higher meeting or resolution quorums for the resolutions to be taken by the General Board on the above-mentioned issues.
2) Special Quorums
As stated above, a greater majority is required in the General Board in order to take some important resolutions. Such regulations, which can also be expressed as higher quorums, are regulated in various articles of the Law.
In Article 620 of the TCC, both a meeting quorum and a resolution quorum are stipulated to take some resolutions. Accordingly, more than half of the entire share capital, which has the right to vote, must be present in order to meet the meeting quorum in the General Board. In other words, the meeting quorum shall be met by the participation of the absolute majority of the capital in the meeting. In order for a decision to be taken at the General Meeting, at least two-thirds (2/3) of the votes represented at the meeting must vote for the resolution. The subjects of the decisions in which these special quorums are needed are given below;
- Changing the business’ field of operation.
- Envisagement of privileged capital shares in voting.
- Limiting, prohibiting or facilitating the transfer of capital shares.
- Increasing the capital.
- Limitation or annulation of the right of preference.
- Changing the company’s headquarters.
- Approval by the General Board for the directors and partners to act contrary to the duty of loyalty or the prohibition of competition.
- Applying to the court for the expulsion of a partner from the company for justifiable reasons and expulsion of a partner from the company for the reason envisaged in the Articles of Association.
- Dissolution of the company
Apart from article 621 of the TCC, there are cases where special decision quorums are sought in order to take decisions in the General Board. These are;
- Pursuant to the provision stipulated in Article 589 of the TCC, without prejudice to the provision of Article 621, the Articles of Association can be amended by the decision of the partners representing two-thirds of the capital, unless otherwise stipulated in the Articles of Association.
- In limited companies, division, merger and type change resolutions can be taken with the decision of three-quarters of the partners, provided that they own at least three-quarters of the capital.
- The capital may be reduced with the affirmative votes of the shareholders or their representatives, who constitute at least 75% of the capital.
- It is only possible to take a resolution at the General Board on contract changes that bring additional or ancillary performance obligations or increase such obligations, only with the approval of all relevant partners.
Conclusion
In order to take the resolutions of the General Board, participation and majority of the votes must be met at the rate stipulated in the law or the Articles of Association. If these majorities are not met at the meeting, the General Board resolution cannot be taken, and even if it is taken, it will be null and void. Depending on the source of the invalidity, it becomes possible to file suits for the determination of the non-existence or annulment of the General Board resolution. You can contact with our team for more detailed information.
Best Regards.
References
ALTAŞ, Soner, (2016), Türk Ticaret Kanununa Göre Limited Şirketler, Seçkin Yayıncılık, Ankara, p.105-110.
BİLGİLİ, Fatih/DEMİRKAPI, Ertan, (2013), Şirketler Hukuku Dersleri, Dora Yayıncılık, Bursa, p.385-387.
Turkish Code of Commerce