What Does Minority Shareholder Mean? Who Are Minority Shareholders?
Minority rights in closed type joint stock companies are in question for the shareholder or owners who own at least 1/10 of the basic capital. In public joint stock companies, minority rights are granted to the shareholder or owners who own at least 5% (1/20) of the issued capital. Therefore, within the framework of these ratios, 10%, 15% or 42% of the shareholders with capital are minority shareholders, while the shareholder with 51% of the capital is considered as the dominant partner in accordance with the majority principle. Rights of the minority owner;
Right to Representation in the Board of Directors
The first of the most important and new rights granted to minority shareholders within the scope of the New Turkish Commercial Code is the representation right of the minority shareholder in the board of directors in joint stock companies. According to the relevant regulation, the minority is given the right to be represented in the board of directors, provided that it is stipulated in the articles of association.
Right to Propose Candidates
With the articles of association, the minority may also be entitled to propose candidates. If there is no justified reason, the person nominated by the minority shareholders must be elected as a member by the general assembly. In the justification of the new Turkish Commercial Code, the recognition of this right has been evaluated as “a contribution that cannot be neglected in terms of social policy and benefit”.
Right to Request Termination
With the new Turkish Commercial Code, minority shareholders have been granted the right to demand the termination of the company with just cause, both in publicly-held joint stock companies and closed-type joint stock companies. According to the relevant regulation, in the presence of just cause, minority shareholders may request a decision to dissolve the company from the commercial court of first instance where the headquarters of the company is located. The concept of just cause is not defined in the New Turkish Commercial Code; However, the continuous violation of minority rights and individual rights, especially the violation of the right to obtain and review information, was deemed “just cause”. It is the court that will decide whether the reasons alleged are justified or not.
Right to Request Special Audit
In the new Turkish Commercial Code, minority shareholders have the right to request a special audit. According to the relevant regulation, if the general assembly rejects the special audit request made by the shareholders, the minority shareholders may request the appointment of a special auditor within three months from the commercial court of first instance where the headquarters of the company is located. In other words, if the shareholder requested a special audit, but the request was rejected by the general assembly, only the minority shareholders can request the court to appoint a special auditor.
Requesting the Printing of Registered Shares
With the new Turkish Commercial Code, it is required that the minority has made a request for the printing of registered shares. In this respect, at the request of minority shareholders in closed joint stock companies, registered shares will be printed and distributed to all registered shareholders. Thus, unlawful methods such as non-printing and non-distribution of share certificates in closed joint stock companies, especially family companies, deprivation of the shareholders from proving these titles, restriction of transfer opportunities, have been prevented. If the minority does not make such a request, there will be no obligation to print stocks.
Right to Invite the General Assembly to the Extraordinary Meeting
In addition to the innovations explained above, there are also some minority rights protected by the New Turkish Commercial Code. One of them is the right to invite the general assembly to an extraordinary meeting and to add items to the agenda. Minority shareholders may request in writing from the board of directors to call the general assembly meeting or, if the general assembly meeting is already to be held, to put on the agenda the issues they want to be resolved, by stating the delaying reasons and the agenda.
The Key Role of the Founders in the Hand of the Initial Management and Supervisory Board
In the new Turkish Commercial Code, the minority shareholders have been given the right to vote negatively on the settlement and release of the founders, the first board of directors and members of the supervisory board. According to the relevant regulation, the peace and release of these persons is subject to the condition that the minority does not vote negatively on this issue. Although it is not possible to increase the mentioned 1/10 and 5% rates with the articles of association, it is possible to decrease them.
Right to Postpone Negotiations of Financial Statements
In accordance with the relevant provision in the new Turkish Commercial Code, the minority may request from the general assembly to postpone the financial statements and the negotiations on related issues for 1 month. In this case, the meeting is postponed for one month by the decision of the chairman, without the need for a decision by the general assembly. The minority request for a postponement of the negotiation of the financial statements for a month later is sufficient, and there is no need to provide a separate reason.