The Turkish Commercial Code (“TCC”) grants various rights to shareholders holding at least one-tenth of the capital (one-twentieth in publicly held companies). Within this scope, one of the significant powers of shareholders referred to as “minority” is the right to request the postponement of the discussion on financial statements and other related matters at the general assembly meeting.

Minority shareholders are not required to provide any justification for exercising this right. The primary purpose of this regulation is to protect the interests of minority shareholders. These shareholders may assert this request twice. However, to prevent the abuse of this right, the acceptance of the second request is subject to a specific condition. Accordingly, following the first postponement, the objections raised regarding the financial statements and recorded in the meeting minutes must not have been addressed within the principles of fair accountability.

No decision is required for the postponement of the general assembly meeting; the mere request of the minority shareholders is sufficient. This increases the significance of this power granted to the minority. However, this request must be made during the general assembly meeting. Postponement requests submitted to the board of directors in writing or verbally before the general assembly are not binding on the general assembly.

1. Scope of Related Matters

The right to postpone the discussion on financial statements covers not only the financial statements themselves but also related matters. However, the law does not explicitly define which agenda items constitute “related matters.” Judicial decisions and legal doctrine have differing evaluations on this issue. According to the generally accepted view, the discharge of the board members and the distribution of dividends are among the matters related to financial statements. However, there are differing opinions on whether matters such as the election of board members, determination of their financial rights, or granting them permission to conduct transactions with the company fall within this scope.

Article 413 of the TCC stipulates that the dismissal of board members and the election of new members are connected to the discussion of financial statements. However, this article is essentially intended to allow the discussion of board elections at a general assembly meeting where financial statements are addressed, even if it is not on the agenda. In numerous decisions, the Court of Cassation has ruled that board elections are connected to the discussion of financial statements and that if the discussion of the financial statements is postponed, the elections must also be postponed. However, in recent years, the Court of Cassation has issued contradictory rulings on this matter.

In particular, in some decisions, the Court of Cassation has reached different conclusions depending on whether the newly elected board consists of former members or new individuals. Accordingly, the re-election of existing board members is deemed impossible without their prior discharge. Since the discharge process depends on the review of the financial statements, the postponement of the discussion on financial statements leads to the postponement of board elections as well.

2. Consequences of Ignoring the Minority Request

If minority shareholders request the postponement of the discussion on financial statements and related matters but the meeting is not postponed and decisions are made on these matters, such decisions will be legally invalid. However, a court ruling is required to establish this invalidity. Therefore, if a minority request exists concerning the discussion of financial statements and related matters, refraining from making decisions on these issues and postponing the general assembly meeting for at least one month, as stipulated in the TCC, will be crucial for legal security.

In the event of a postponement of the general assembly meeting, it must be ensured that the legal procedures regarding the convening and holding of the new meeting are duly followed.