In order to prevent the spread of the COVID-19 epidemic, the Republic of Turkey’s Ministry of Commerce has taken some measures on how companies should organize their board meetings. Within the scope of these measures, the ordinary general meetings of joint stock and limited companies, which were previously invited to the meeting in accordance with the Turkish Commercial Code numbered 6102 (“TCC”) and the company agreement, were cancelled with a decision to be taken by the governing bodies, without waiting for the general meeting to be held.
Article 409 of the TCC regulates when the ordinary general assembly meetings of joint stock companies and article 617 for Limited Company assembly meetings. In accordance with the aforementioned provisions, it is foreseen that general assembly meetings will be held within three months after the end of the accounting period every year.
Considering that the operating period ends in companies in December, companies are expected to hold their ordinary general meetings until the end of March, as required by the TCC. Due to the fact that the time of holding the ordinary general assembly meetings is a regular order, the decision of the general assembly not to be held until March, and the decision to be held afterwards, will not affect the validity of the decisions to be taken in this delayed meeting, but if there is a loss caused by the members of the board of directors causing the failure of the meeting, will be able to raise responsibility. However, this general rule cannot be applied when evaluated within the scope of the measures taken by the Ministry of Commerce under COVID-19.
In order to prevent the spread of the COVID-19 pandemic, it was announced with the Presidential Circular No.2020/3 dated 19.03.2020 that the all of educational and training institutions will be closed for further notice, as well as postponing meetings, conferences, theaters, cinemas and similar organizations.
In the letter of the Ministry of Commerce, General Directorate of Domestic Trade dated 20.03.2020 and numbered 43382221, it is underlined that the ordinary general assembly meetings are not held through physical meetings and are as follows;
“As it is known, in the Turkish Commercial Code numbered 6102, joint stock and limited companies are expected to hold the ordinary general assembly meetings within three months from the end of each operating period.
On the other hand, the calendar year is generally preferred by our companies as the operating period, which reveals the necessity of completing the ordinary general assembly meetings by the end of March.
In order to prevent the spread of the coronavirus COVID-19 (Coronavirus) epidemic, some measures were taken in terms of board meetings of companies, especially during the period when company general meetings were held.
In this context, in accordance with the Turkish Commercial Code No. 6102 and the company agreement, the ordinary general meetings of joint stock and limited companies, which were previously invited to the meeting by the management bodies, were cancelled by a decision to be taken by the management bodies, without waiting for the general assembly to be held. ”
In the said statement, it is stated that if the board of directors calls for general assembly in public for joint stock companies and limited companies, it is possible to postpone / cancel the general assembly to a later date with the decision of the new board of directors. This means that the call for the general assembly can be cancelled by a new decision or a new call can be made in this way to be made at a later date. In this context, the board of directors calling for the meeting of the general assembly has been authorised to make decisions to prevent the meeting from taking place and in this way, it has been recommended not to hold meetings with physical participation.
The preference of the path proposed by the Ministry is that it would be appropriate to postpone the general assembly with a decision of a new board of directors before the date of the general assembly, without starting the meeting. It would be appropriate for the board to set a new date for the postponement end or leave the matter to a decision of the board of directors at a later time without specifying any specific new date for the general assembly.
However, article 1527 of the TCC will support what companies can do if they do not want to cancel the general assembly meetings, as not every company will follow this path. According to the related article; ‘'(1) Provided that it is arranged in the company contract or articles of association, the board of directors and managers in capital companies can be held entirely in electronic environment, or it can also be held through the electronic participation of some members in a meeting where some members are physically present. In such cases, the provisions regarding the meeting and decision quorums envisaged in the Law or in the company contract and in the articles of association shall apply exactly. "
If the relevant article adapted according to the global epidemic of COVID-19; Companies that use the electronic general assembly system and want to hold a general assembly meeting are that shareholders can hold general assembly meetings electronically in order to prevent the epidemic, without the need to gather together in a physical environment.
In the letter of the Ministry of Commerce General Directorate of Domestic Trade dated 20.03.2020 and numbered 43382221, this issue is mentioned as follows:
“…In accordance with article 1527 of the Turkish Commercial Code, in order to prevent the outbreak in companies that use the electronic general assembly system and wish to hold a General Assembly meeting, shareholders are advised to use their discretion to participate in the General Assembly meetings electronically without participating in the physical environment.
In this context, the company's contracts or articles of association do not have provisions that allow the board meetings to be held electronically, the meetings they plan to hold in this period can be held through ‘electronic General Assembly meeting System’ and ‘Electronic board of Directors System’.
Companies have to benefit from this opportunity by receiving support from the Central Registrar's office and in a way that does not eliminate the necessity of providing the holders with the opportunity to participate in electronic platform, and the companies have been given the opportunity to realize the contract amendment regarding the provision that allows the board to be held in electronic platform at the first”.
With the relevant ministerial letter, companies were encouraged to prefer electronic participation rather than physical meetings. With this application, it is aimed to prevent the covid-19 pandemic and to reduce the spread time of the outbreak. For this purpose, it was determined that the partnerships, which do not have to hold an electronic General Assembly and therefore do not have provisions in the articles of association for holding an electronic General Assembly, must have provisions in the articles of association required to hold an electronic General Assembly and must have a website specific to this purpose.
For this reason, although it is stated that a general assembly can be held in electronic environment within the ministry's letter, it is important that the meeting date and day are specified before the end of the COVID-19 pandemic and without any loss of rights or damage. For detailed information and advice, please contact us via the following information.
By Ali Guden, Partner, and Dilara Nihal Tunc, Associate, Guden