Decision Making Guide in the General Board of Limited Companies

The General Board in a limited company is the decision-making body formed by the presence of all the partners. It convenes once or more than once a year and takes decisions with the quorum of meetings and resolutions stipulated in the Law or in the Articles of Association on the matters to which it is authorized by the company. The majority required to take a decision in the General Board of a limited company varies according to the subject of the decision to be taken. Since the specifications on this subject are widely seen in various articles of the Turkish Commercial Code and it is sufficient to refer to the decrees of joint-stock companies on some issues, it takes time for those who are not the expert and these may face some difficulties to get the right answer of the topic in question.

Our first aim in this guide on meeting in the General Board of limited companies and decision quorums, which we have formed by compiling the most searched meeting in the General Board of limited companies and decision quorums, is to help those who are interested in this subject by providing clear and general information. Below, we tried to give short and concise answers to the basic questions about which decisions should be taken by which majority in the General Board.

1-What is the Quorum Required to Convene the General Board of the Limited Company?

There is no minimum meeting quorum for the General Board meeting specified in the Turkish Commercial Code For this reason, even if only one partner is present at the meeting, it may take decisions on the issues on the agenda. Only regulations regarding decision quorum are set forth in the Law and it has been preferred to facilitate decision making in limited liability companies by not stipulating meeting quorum.

2-What are the Quorums Required for Taking Decisions in the General Board in Limited Companies?

General Board resolution quorums in a Limited company should be analyzed in two sub-titles: general quorums and special quorums. So, the decision quorum that will be valid in cases where a higher quorum is not stipulated in the Law is called a general quorum. Special quorums, on the other hand, are the quorums that will be valid in the General Board resolutions, which are expected to be accepted with a larger number of votes, since they are considered more important by the legislator. Below, these numbers are indicated according to the subject of the decision.

In the law, a specification regarding the decision quorum in limited companies is defined in the article. According to this specification, all General Board resolutions in limited companies are taken with the absolute majority of the votes represented at the meeting. However, if a different quorum is determined in the Law or in the Articles of Association, that number will be a valid quorum.

It should be noted that if a higher number of quorums are sought in the Law in order to make certain decisions, the provisions of the Articles of Association that will further make higher these quorums can only be accepted with the majority stipulated in the Articles of Association. (Turkish Commercial Code article 620).

3-With Which Majority Should Decisions Be Taken Regarding the Amendment of the Articles of Association?

Unless otherwise stipulated in the Articles of Association, it may be amended by the decision of the partners representing two-thirds of the capital. However, to take some decisions requiring amendment of the Articles of Association, if more a higher number of quorums are sought as stipulated in article 621 of the Turkish Commercial Code, these numbers will be valid.

(Turkish Commercial Code article 589).

4-With Which Majority should the General Board Resolution on Changing the Field of Operation of the Company Be Taken?

In order for the decision to change the company’s field of operation to be taken at the General Board,more than half of the entire share capital holding that has the right to vote, and at least two-thirds of the votes represented at the meeting must vote for the decision to be taken.

(Turkish Commercial Code article 621).

5- With Which Majority Should the Decisions on Predicting the Preferred Shares in Voting and Limiting, Prohibiting or Facilitating the Transfer of Basic Capital Shares Be Taken?

In order for the above-mentioned decisions regarding the basic capital shares to be taken at the General Board,more than half of the entire share capital holding that has the right to vote, and at least two-thirds of the votes represented at the meeting must vote for the decision to be taken.

(Turkish Commercial Code article 621).

6-With Which Majority Should the Decisions Regarding the Increase or Decrease of the Capital Be Taken?

The affirmative votes of the owners or representatives of the shares constituting at least seventy-five percent of the capital are required for the decision to reduce the capital to be taken at the General Board. If this majority is not achieved in the first meeting, the same majority will be sought in other farther meetings.

 

The decision to increase the basic capital can be taken on the condition that at least two-thirds of the votes represented and the absolute majority (more than half) of the entire capital that has the right to vote are present. (Turkish Commercial Code art.592, art.473/3, 421/3, 621).

7-What is the Quorum Required for Decisions on Division, Merger and Change of Type of the Company?

In limited companies, on the condition that they own at least three-quarters of the capital, the decision of division, merger, and change of type can be taken at the General Board with the decision of three-quarters of the partners.

(Turkish Commercial Code art.151/1, art.189/1-c, m.173/2).

8-What is the Majority Required for the Dissolution of the Company?

In order to decide on the dissolution of the company, more than half of the total capital having the right to vote in the General Board must be present and at least two-thirds of the votes represented at the meeting must vote in favor of the resolution.

(Turkish Commercial Code article 621).

9- What is the Majority Required for Changing the Company Headquarters?

A special resolution quorum is also stipulated for the change of the company headquarters. In order for this decision to be taken at the General Board, more than half of the entire capital holding the right to vote must be present and at least two-thirds of the votes represented at the meeting must vote in favor of the resolution.

(Turkish Commercial Code article 621).

10-With Which Majority Should the Decision to Expel a Partner From the Company?

In order to apply to the court to expel a partner from the company due to justified reasons, and to take the decision to expel a partner from the company for the reason envisaged in the Articles of Association at the General Board, more than half of the entire share capital having the right to vote and at least two-thirds of the votes represented at the meeting must vote in favor of the resolution.

A contract amendment in regard to being able to add the reasons for the expulsion of a partner from the company to the Articles of Association afterward is possible with the unanimous decision of all partners representing the company’s capital at the General Board meeting. (Turkish Commercial Code article 621).

11- With Which Majority Can Decisions on Limitation or Annulment of the Right of Preference be Taken?

In order to limit or abolish the right of preference, more than half of the entire share capital having the right to vote must be present and at least two-thirds of the votes represented at the meeting are in favor. (Turkish Commercial Code article 621).

12- What is the Quorum for Amendments in the Articles of Association that Impose New Obligations to the Partners or Increase the Existing Obligations?

General Board resolutions that amend the Articles of Association, and stipulate additional or ancillary performance obligations or increase existing obligations can only be taken with the approval of all relevant partners. (Turkish Commercial Code art. 607).

Conclusion

This bulletin has been tried to give answers to the meeting and decision quorum required for taking a decision in the General Board of limited companies within the framework of the provisions of the Turkish Commercial Code. The details and exceptional issues related to the subject are not mentioned. For detailed information that you cannot access from this content or different questions, you can see the article titled “Qualifications for Meetings and Resolutions at the Limited Company General Board” in the Blog section of our website, or you can contact our team to get detailed information.

Best Regards.

 

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