Declared as a pandemic by the World Health Organization, the Coronavirus (Covid-19) has affected commercial life, as well as everyone, to a great extent. And it can probably be said that he has changed the way he does business for the future.
In order to reduce the impact of the coronavirus, we will talk about some of the measures recommended by the Ministry of Commerce for companies and evaluate these proposals from a legal point of view. In this difficult period, we think that it is useful to know these measures, which are generally in the nature of suggestions, in order to avoid the disruption of the commercial operation of the companies and to overcome this process with the least damage.
After all, perhaps the meeting styles will change, as will the way they do business.
A- You can cancel the General Assemblies or you can hold your General Assemblies electronically:
The first of these suggested measures was proposed with the letter of the Ministry of Commerce, General Directorate of Domestic Trade, dated 20/03/2020 and numbered 53382221, that the general assemblies, which were duly called for a meeting, could be canceled with a decision to be taken by the management bodies of the companies to be held at a future date.
It is possible for companies that do not prefer the cancellation of the general assembly to hold general assembly meetings electronically by establishing the necessary system. Although this provision, which was introduced with the new Turkish Commercial Code, which was enacted in 2012, is in our law, it was not preferred much in practice, but probably at the end of the Pandemic process, it was revealed how important and modern provision is.
As a matter of fact, in article 1527/1 of the Turkish Commercial Code under the title of “Assemblies in the electronic environment”; ”Provided that it is regulated in the articles of association or the articles of association, the board of directors and the board of directors in capital companies can be held completely electronically, or it can be carried out by the participation of some members electronically in a meeting where some members are physically present. In such cases, the provisions regarding the meeting and decision quorums stipulated in the Law or the articles of association and the articles of association are applied exactly.” regulated by the provision.
In this direction, in order for electronic general assembly meetings to be held, “” published in the Official Gazette dated 29.08.2012.With the Communiqué on the Boards to be held in the Electronic Environment, Except for the General Meetings of Joint Stock Companies in Commercial Companies , published in the Official Gazette dated 28.08.2012,The technical conditions stipulated in the provisions of the “Regulation on General Assemblies to be Held Electronically in Joint Stock Companies” must be fulfilled.
Although the above-mentioned article mentions that there is a provision in the company/articles of association in order to hold an electronic general assembly meeting, companies can hold their general assembly meetings electronically or companies that already use the electronic general assembly system can hold their general assembly meetings electronically with minimum participation in the physical environment. are stated in the letter of the Ministry of Commerce.
Companies whose articles of association do not have a provision in this regard, will be able to amend their articles of association in the first general assembly to be held from now on. Our advice to companies is that if there is still no such provision in their articles of association, they should immediately include this opportunity in their articles of association and make an amendment to the articles of association.
B- Alternative method for taking a decision by the Board of Directors: Circulation
The board of directors and the board of directors can also be held electronically, or these boards can be held electronically or online without meeting physically, and the written text containing the decisions taken can be made by mail or by circulating.
This is an opportunity introduced in the 4th clause of the 390th article of the Turkish Commercial Code No. 6102. As a matter of fact, the provision of the law in question; “If none of the members requests a meeting, the resolutions of the board of directors may also be taken upon the written approval of at least the majority of the total number of members, for a proposal made by one of the members of the board on a certain subject, written in the form of a decision. The fact that the same proposal has been made to all members of the board of directors is the validity condition of the decision to be taken in this way. The approvals do not have to be on the same paper; however, it is necessary for the validity of the decision to be pasted in the resolution book of the board of directors, or converted into a resolution containing the signatures of those who accept it, and put it in the resolution book.” formatted.
As can be seen, there are some formal conditions regarding the validity of the decisions taken by circulating. Nevertheless, this method seems to be a very useful method for the members of the board of directors residing outside of Turkey, or for companies with members of the board of directors who cannot actually attend the meetings due to their own special reasons or extraordinary reasons such as the pandemic.
C- Another precautionary suggestion: Profit distribution
Another proposal of the Ministry of Commerce announced in a letter to TOBB is that at the general assembly meetings of the capital companies to be held this year for 2019,
- Retained earnings are not subject to distribution,
- The distribution amount should not exceed 25% of the net profit for the year 2019,
- The issues of not authorizing the board of directors to distribute dividend advances
put on the agenda and discussed at the meeting.
In this regard, in the 5th paragraph of the 13th article of the Regulation on the Procedures and Principles of the General Assembly Meetings of Joint Stock Companies and the Representatives of the Ministry of Customs and Trade to Attend These Meetings , it is obligatory to include on the agenda the issues requested to be discussed in the general assembly of the company by the Ministry as a result of the audit or for any reason. . ” clause is included. In the light of this provision, it will be a necessity for these issues to be put on the agenda at the meetings and discussed and decided by the members; however, it was thought that the decision to be made would be within the discretion of the members.
Subsequently, in order to make the recommendation of the Ministry of Commerce a legal obligation and to remove it from the scope of the companies’ discretion, the following temporary provisions regarding the profit distribution limitation to the Turkish Commercial Code No. 6102 and Article 12 of the Law No. 7244 published in the Official Gazette dated April 17, 2020 13th article has been added.
And this matter is no longer a recommendation and has become an arrangement that will be remembered in the future in this extraordinary period we live in;
“PROVISIONAL ARTICLE 13 – (1) In capital companies, it can be decided to distribute only up to twenty-five percent of the net profit for the year 2019 until 30/9/2020, previous year profits and free reserves cannot be subject to distribution, and advance dividends to the board of directors by the general assembly. distribution cannot be authorized. The provision of this paragraph shall not apply to companies in which the state, special provincial administrations, municipalities, villages and other public legal entities and more than fifty percent of the public funds own directly or indirectly more than fifty percent of the capital. The President is authorized to extend or shorten the period specified in this paragraph for three months.
(2) If the General Assembly has decided to distribute dividends for the 2019 accounting period, but the shareholders have not yet been paid or partial payments have been made, the payments for the part exceeding twenty-five percent of the 2019 net profit for the period are postponed until the end of the period specified in the first paragraph.
(3) The Ministry of Commerce is authorized to determine the exceptions regarding capital companies within the scope of this article, as well as the procedures and principles regarding implementation, by obtaining the opinion of the Ministry of Treasury and Finance.”
With this provision, it is aimed to provide a legal basis for the measures for the protection of the equity capitals of the capital companies, which will be specific to this extraordinary period. Subsequently, the aforementioned regulations were detailed in the Communiqué on the Procedures and Principles Regarding the Implementation of the Provisional Article 13 of the Turkish Commercial Code No. 6102 in the Official Gazette No. 31130 dated 17 May 2020.
In line with the above information, it is of course useful to take into account the measures that the Ministry of Commerce has presented, some as recommendations and some as regulations, in order for companies to pass through this grave process that has affected our country and the world without interruption and trouble-free business activities.
As you know, every extraordinary period creates its own conditions, on this occasion, it will be extremely beneficial to include alternative ways such as electronic general assemblies and virtual boards of directors in the relevant laws and regulations in commercial life, both for today and for the future.
Ayse Bilge SAHIN
Lawyer / K&P LEGAL LAW OFFICE
(Contributed by Atty. Erdal Kardas)