Then, can we claim that the minority shareholders have no rights? Absolutely not. Because Turkish Commercial Code (TTK) includes many articles which protect their rights. The problem is their unawareness about their rights. We can summarize the aforementioned articles as follows.

TTK 355: The minority shareholders may claim The Board of Directors to investigate whether the company is mismanaging or not or even to call the company for an extraordinary general meeting.

TTK 356: Every shareholder may apply to the auditor to investigate against The Board of Directors or Managers whether they can manage the company properly or not. It is compulsory for the auditors to declare the prevailing condition in their reports to be presented to annual general meeting. In case of an improper management, the auditors have to convene the Extraordinary General Meeting according to TTK 355. If the number of applicants is over 10% then the auditors have to emphasize the facts in their reports and call the members for the General Meeting. If the auditors do not carry out the said requisites, the minority shareholders may apply to the court for the General Meeting to convene.

TTK 366: The minority shareholders own more than 1% of the company’s capital may apply to the Board of Directors to convene the Extraordinary General Meeting because of not performing their duties that mentioned.

TTK 367: If the Board of Directors and Auditors do not convene the Extraordinary General Meeting, the Court may authorize the minority shareholders to convene the General Meeting and point out clauses that will take in the Agenda.

TTK 341: During the Ordinary or Extraordinary General Meetings of the General Assembly, the shareholders having over 10% shares may claim to take legal actions against the members of the Board of Directors on the ground compensating damages. The minority shareholders may participate the said lawsuits.

TTK348: During the Ordinary or Extraordinary General Meetings convened, the shareholder owns more than 10% shares may claim a special auditor to be designated in order to investigate illegality and looking the accounts and balancing sheet audit. If the General Assembly refuses this claim, minority shareholders may apply to the Court to appoint a special Auditor.
TTK 377: The discussion in the General Assembly about the confirmation of the balance sheet may be postponed for a month. Due to the detailed investigation of balance sheet, being claimed by minority shareholders having over 10% of the shares, an explanation maybe asked by the Board of Directors about the uncertain or incorrect matters. If the said explanations are not found satisfactory, convention for the balance sheet maybe postponed for one more month. In such condition, the Court may appoint a custodian on behalf of the company and the investigation is carried out by him.

TTK 362: All of the accounts concerning the Company have to be submitted to the investigation of the shareholders at least 15 days ago.

TTK 385: The General Assembly has no right to diminish the vested rights which are in the authorized capital like sharing profit, participating the General Assembly without the consent of shareholders.

TTK 362: The shareholders may claim one copy of the year’s profit and loss account, balance sheet and annual report from the management after the General Meeting.

TTK363: The shareholders has right to inform the Auditor about doubtful matters and come in for an explanation.

Convention of the General Assembly in join-stock companies are bound to some formalities. For the Convention of General Assembly, Agenda and a letter of invitation has to be posted to the shareholders via registered mail at least 15 days ago. If this letter has not been postponed or its content is deficient or the General Assembly has come up with an illegality, the shareholders may take a legal action for revocation. The lapse of time of the lawsuit is 3 months starting from the day of the General Assembly.

The Board of Directors, which is selected by the majority of shareholders, has no right to accomplish anything. According to TTK 320 member of the Board of Directors are responsible towards the Company and shareholders because of the damages inflicted deliberately by negligence or incautiousness with their own assets according to Turkish Law of Obligations Code (BK) Article 528. Supreme Court of Appeals decrees state that if there is a decrease in the Company’s assets or anticipated profit, the Board of Directors is responsible towards the Company and shareholders unless they prove their innocence.

The duties of the members of the Board of Directors are, as follows:

1)Because of the fiscal situation of the company in a financial breakdown to take measures.
2)Proper bookkeeping for the operations of the company.
3)To arrange balance sheet and profit and loss records.
4)To arrange annual reports.
5)To make proposals for the distribution of the profit.
6)To assign or dismiss the managers of the Company.
7)To select new members for the Board of Directors in the case of displacement.
8)To accomplish registration and declaration affairs.
9)Duties concerning the General Assembly Meeting
a)Written invitations for the convention.
b)Invitations need to be posted via registered mail.
c)To arrange the Agenda.
d)To prepare proposals about balance sheet, annual report and distribution of profit for the investigation of shareholders.
e)To provide the Commissioner of Ministry.
f)To determine whether the shareholders have the right to vote.
g)To make preparations for meeting minutes.
h)To carry the decisions of the General Assembly.
i)To file a lawsuit of revocation against the decisions of the General Assembly.

10) To accomplish the liquidation affairs.

Responsibilities of the members of the Board of Directors are, in general.

A)To manage the Company properly.
B)To protect the advantages of the Company.
C)To take pain over the duties.
D)To be devoted to the Company.
E)To keep the secrets of the Company
F)Not to deal with the company
G)Not to compete with the Company.
H)Accomplish the duties by theirselves.
I)To account for their own operations.
J)To avoid misleading behavior.
K)To follow the prohibitions determined.
L)Not to participate the meetings concerning themselves.
M)To declare their own assets.

If the members of the Board of Directors do not fulfill their duties, consequently they have to compensate the damages they caused both to the Company and shareholders. If the Auditor do not sue the Board of Directors, the shareholders may sue the Company by an attorney at law. Even a custodian may be appointed for the Administration of the Company.

In the enlightenment of TTK385, division of profits is one of the vested rights of the shareholders. If the decision of the General Assembly is essentially contradictory to the spirit of this right and objective good will principles accordingly the said decision should be revoked. Even if the main contract of the Company includes that the whole of the profit will be spared as spare part, the shareholders may claim the said decision to be revoked within 3 months unless there is an essential reason for not to divide the profit in the concerning year.

The shareholders with large share have right to recapitalization in joint-stock companies. However, according to TTK 394 old shareholders have right of preference as the amount of their shares from the increased capital.

The main problem of the minority shareholders are not to be informed about the Company’s operations. The legislation has provided some possibilities for the shareholders. According to TTK 363 the shareholders have the right of claiming necessary information from the Auditor on uncertain points, they would deem. By means of this legal possibility, the Auditor will provide satisfactory information to the concerning shareholders by examining all of the documents and commercial registrations. Nevertheless, the shareholders cannot examine commercial records and documents by themselves.
Besides, jurisdiction and Doctrine clearly express that any shareholder may apply to the Board of Directors in any matter and subject to get information, which must be provided otherwise it can be obtained by enforcement by the Court.

As you realize Turkish Commercial Code includes many dispositions to protect the rights of minority shareholders. For this reason, do not hesitate if your share in a company is small or diminishes.