Quorum Requirements for General Assembly Meetings and Resolutions in Joint Stock Companies

Introduction

In joint stock companies, the general assembly is one of the two main governing bodies and convenes with the participation of shareholders or their representatives. The decisions taken during general assembly meetings are binding on all shareholders, regardless of whether they were present at the meeting or not. Therefore, the legislator has stipulated certain quorum requirements for participation and voting to ensure the meetings are held and decisions are made in a legitimate and efficient manner. These quorum rules also serve to protect shareholders both from the company and from each other.

Quorum Requirements for Meetings and Resolutions

In general assembly meetings, two types of quorums are required: quorum for holding the meeting and quorum for passing resolutions.

• The meeting quorum refers to the minimum participation required for the general assembly to convene and open.

• The resolution quorum refers to the minimum number of favorable votes required to adopt a resolution once the meeting has been duly convened.

Under Turkish law, unless otherwise provided, quorum is calculated based on capital ratios, not headcount. Resolutions adopted without fulfilling the required quorum thresholds are considered null and void under both dominant academic opinion and Turkish Court of Cassation precedents.

Quorum rules are classified into ordinary and extraordinary (reinforced) quorums.

1. Ordinary Quorums

Ordinary quorum requirements are regulated under Article 418 of the Turkish Commercial Code (TCC). According to this provision:

• Unless a higher quorum is stipulated by law or the articles of association, the general assembly may convene with the participation of shareholders or representatives representing at least one-quarter of the capital.
• This quorum must be maintained throughout the meeting.
• If this quorum is not met in the first meeting, there is no quorum requirement for the second meeting.
• Resolutions are adopted by the majority of votes present at the meeting.

2. Extraordinary (Reinforced) Quorums

Extraordinary quorums are required for more critical decisions, often involving changes to the articles of association. The aim is to ensure broader participation by shareholders. These are mainly regulated under Article 421 of the TCC, but some other articles also provide special quorum rules. Additionally, the articles of association may stipulate higher quorum thresholds than those prescribed by law.

a) General Amendments to the Articles of Association: Unless otherwise stated by law or in the articles of association, amendments require:

• Presence of shareholders representing at least 50% of the capital, and
• Majority vote of those present.

If this quorum is not met at the first meeting, a second meeting may be held within a month. At this second meeting, at least one-third of the capital must be represented. These quorums cannot be lowered through amendments to the articles of association.

b) Unanimous Consent Required (Meeting and Resolution Quorum)

• Imposing primary or secondary obligations on shareholders to cover balance sheet losses (TCC 421/2-a),
• Moving the company’s headquarters abroad (TCC 421/2-b),
• Converting the company into a cooperative (TCC 189/1-b),
• Adding items to the agenda in a general assembly convened without a formal call (TCC 416/2),
• Consolidating shares and increasing nominal value without changing the total capital (TCC 477/2),
• Waiving restructuring reports or due diligence rights in mergers, demergers, or conversions, only by unanimous shareholder approval (TCC 147/4, 149/5, 169/4, 171/2, 186/3).

c) 75% of Capital Required (Meeting and Resolution Quorum)

• Changing the company's business purpose completely (TCC 421/3-a),
• Creating preferred shares (TCC 421/3-b),
• Restricting transfer of registered shares (TCC 421/3-c),
• Reducing the capital (due to reference from TCC 473/3),
• Approval of post-incorporation acquisitions (TCC 356/3),
• Issuance of securities or granting authority to the board for such issuance (TCC 504, 505),
• Sale of significant company assets during liquidation or as a going concern (TCC 538/2, 408/2-f),
• Dissolution and liquidation of the company (TCC 529/1-d).

d) At Least 60% of Capital Required (Meeting and Resolution Quorum)

• Termination of liquidation (TCC 548/1),
• Restriction or removal of pre-emptive rights (TCC 461/2).

Conclusion

Quorum requirements for meetings and resolutions of the general assembly play a vital role in ensuring sound corporate governance. While ordinary matters can be decided with simple majorities, more fundamental issues—such as amendments to the articles of association—require reinforced quorums. Thus, it is crucial to consider these enhanced quorums when drafting a company’s articles of association. In addition, for publicly traded joint stock companies, quorum thresholds prescribed by the Capital Markets Law must also be observed.

Asist Law Firm

“This note is prepared solely for informational purposes and in accordance with current legal regulations. This note does not constitute legal advice.”