In the first part of our study, detailed explanations are provided regarding the structure of joint-stock companies, their organs, meeting procedures, general assembly resolutions, and declaratory actions that may be initiated on grounds of nullity and invalidity. In the second part, we will discuss the annulment actions that may be filed in cases of voidability of general assembly resolutions,  aiming to conduct a comprehensive assessment of the declaratory and annulment actions that may be brought against general assembly resolutions, along with their legal nature and the key elements to be considered.

I. ANNULMENT ACTIONS AGAINST GENERAL ASSEMBLY RESOLUTIONS

Another form of invalidity of general assembly resolutions is annullability. In order for a general assembly resolution to be annulled, it must be an existing resolution with complete formal elements. In addition, the resolution in question must not be tainted by nullity or voidability. [1] Therefore, until an annulment decision is rendered, the general assembly resolution in question is considered valid. The most significant difference between annullability and nullity or voidability of a general assembly resolution lies in this aspect.

The annulment lawsuit is regulated under Articles 445 and 446 of the Turkish Commercial Code (TCC). In general, it can be stated that in order to discuss the annullability of a general assembly resolution, it is required that the resolution be contrary to the law, the articles of association, and especially the principle of good faith. [2] In fact, it is accepted that the ground for annullability, referred to as "contrariety to the law," should be understood not only as contrariety to the TCC but to all legal provisions. [3] In such cases, an annulment lawsuit may be filed within three months from the date of the relevant general assembly resolution before the commercial court of first instance located at the company’s headquarters. [4] Pursuant to the Code of Civil Procedure No. 6100 (“CCP”), an annulment lawsuit against general assembly resolutions is considered a constitutive lawsuit. [5] According to Article 108 of the CCP, “Through a constitutive lawsuit, it is requested from the court to establish a new legal situation, to change the content of an existing legal situation, or to abolish it.” Accordingly, since the annulment of a general assembly resolution is considered a constitutive lawsuit that creates a new legal situation, it must be subject to the provisions and consequences of a constitutive lawsuit.

a) Illegality Pursuant to Article 445 of the Turkish Commercial Code (TCC)

It is possible to request the annulment of general assembly resolutions that are contrary to the law. The illegality mentioned here is not limited solely to the Turkish Commercial Code (TCC) but encompasses all legislative provisions. Pursuant to Article 27 of the Turkish Code of Obligations (TCO), contrariety to mandatory legal provisions is considered nullity. Accordingly, in the presence of general assembly resolutions that violate mandatory rules stipulated in the laws, it is necessary to refer to nullity rather than annullability. Therefore, it should be accepted that the annulment may be requested for general assembly resolutions that are not void or null but constitute a violation of legal provisions.

In the doctrine, there is a debate regarding which legal regulations should be included within the scope of "contrariety to the law." One view holds that "this term should not be understood solely as texts that fall below the constitution within the hierarchy of norms and that the legislative body designates as laws." [6] Another view, however, argues that the broad interpretation of the term "law" being determined for the article on contrariety to the law may exert pressure, and therefore, the limitation should be construed narrowly. [7]

Examples of general assembly resolutions that may be subject to annulment on the grounds of contrariety to the law include resolutions that unjustly deprive shareholders of their preemptive rights, resolutions adopted on matters not included on the agenda, resolutions adopted with the participation of shareholders deprived of voting rights, and resolutions where unauthorized persons cast votes in a manner that influences the decision. [8]

In addition to Article 445 of the Turkish Commercial Code (TCC), the annulment of general assembly resolutions that violate the regulation titled “Principle of Equal Treatment” under Article 357 of the TCC may also be requested. During the period of the former TCC, the regulation concerning the principle of equal treatment was not included in the legislation but was accepted through doctrine and Supreme Court decisions. With the new TCC, this principle has been incorporated into our legal system as a statutory provision. Accordingly, each shareholder must be treated equally and under equal conditions, and be subject to equal treatment. The equality mentioned here does not pertain to share or stake ratio but aims at ensuring a fair structure. For instance, the right to information granted under TCC Article 437 should be recognized equally for all shareholders regardless of share or stake ratio. General assembly resolutions that violate the principle of equal treatment and cause infringements on the protection of shareholders’ special interests are considered annullable resolutions. [9] However, it should also be noted that in some cases, general assembly resolutions that violate the principle of equal treatment may be deemed null and void. If general assembly resolutions are adopted to partially or entirely abolish the principle of equal treatment on a continuous basis, this would contradict the fundamental structure of a joint-stock company and, therefore, should be subject to the sanction of nullity pursuant to TCC Article 447

b) Contrariety to the Articles of Association Pursuant to Article 445 of the Turkish Commercial Code (TCC)

Pursuant to Article 339 of the Turkish Commercial Code (TCC), “The articles of association must be made in writing, and all founders’ signatures must be notarized, or the articles of association must be signed in the presence of the trade registry director or their deputy.” For this reason, every joint-stock company has articles of association. If a general assembly resolution is adopted contrary to the provisions set forth in the relevant articles of association, an annulment lawsuit may be filed against such resolution. However, it should be noted that if a mandatory, supplementary, or interpretative provision of the law is directly and exactly included in the articles of association, and the general assembly resolution violates this provision, then the issue concerns nullity or invalidity rather than annullability of the general assembly resolution. [10]

c) Contravention of the Principle of Good Faith Pursuant to Article 445 of the Turkish Commercial Code (TCC)

In joint-stock companies, general assembly resolutions must be adopted in accordance with the principle of good faith pursuant to Article 2 of the Turkish Code of Obligations (TCO). Otherwise, the annulment of general assembly resolutions that do not comply with the principle of good faith may be requested. This regulation primarily aims to prevent the majority from oppressing the minority through unjust decisions.

d) Annullability in Case of Violation of the Notice Procedure

Article 446 of the Turkish Commercial Code (TCC) stipulates that shareholders may file an annulment lawsuit in cases where the notice for the general assembly was not duly made. The procedure for convening the general assembly is regulated under Articles 414, 415, and 416 of the TCC. In the doctrine, there are differing opinions regarding the general assembly resolutions adopted as a result of non-compliance with the notice procedure. First and foremost, it should be noted that there will be a distinction between the cases of complete absence of notice and improper notice in terms of nullity. In cases where no notice has been made at all, the general assembly resolutions adopted should be considered null and void. However, if the notice was made improperly, the annullability of the resolutions should be discussed. For instance, if the provisions of the TCC regarding the convening of the general assembly have not been severely violated, it is accepted that the resolution in question may be annulled. [11] Moreover, some scholars argue that merely conducting an improper notice procedure should not automatically lead to the annulment of a general assembly resolution. Instead, the annulment should only be granted if the resolution itself violates the articles of association or the principle of good faith. [12]

e) The Rule of Effect in the Annulment of General Assembly Resolutions

Pursuant to Article 446/1-b of the Turkish Commercial Code (TCC), it is stipulated that “regardless of whether they were present at the meeting or cast a negative vote, shareholders who claim that the notice was not duly made, the agenda was not properly announced, persons or representatives without the right to participate in the general assembly attended and voted, or that participation and voting rights were unjustly denied, and that these irregularities had an effect on the adoption of the general assembly resolution” may file an annulment lawsuit. The issue referred to as “the irregularities having an effect on the adoption of the general assembly resolution” is commonly known in the doctrine as the ‘rule of effect.’ [13]

The concept intended to be expressed by the rule of effect is the causal link, or in other words, the concept of adequate causation. [14] What is meant by the rule of effect is that the resolution subject to annulment was adopted by the general assembly as a result of the irregularities enumerated in Article 446 of the Turkish Commercial Code (TCC). Therefore, if such irregularities had not occurred, the general assembly resolution whose annulment is being requested would not have been adopted. The plaintiff who files an annulment lawsuit based on the rule of effect bears the burden of proof. Consequently, shareholders who claim that unauthorized persons or representatives participated and voted at the meeting, that the notice was not duly made, that the agenda was not properly announced, or that they were unjustly denied the right to participate and vote at the general assembly are obliged to prove not only these allegations but also the existence of an adequate causal link between the irregularity and the general assembly resolution in question. [15]

Moreover, it should be noted that the only lawsuit that can be filed based on the rule of effect is an annulment lawsuit; it is not possible to file a declaratory lawsuit on the grounds of nullity by relying on the rule of effect. [16]

f) Annullability of Rejection Resolutions Adopted by the General Assembly

It is possible for the items on the agenda of a general assembly meeting to result not only in acceptance but also in rejection. Whether an annulment lawsuit can be filed against such rejection resolutions is a matter of debate. However, since a resolution is deemed to have been adopted even if an agenda item is resolved negatively, a resolution rejecting an agenda item by the general assembly should be subject to an annulment lawsuit. [17] Nevertheless, according to Supreme Court decisions, if the item or items constituting the agenda of the general assembly meeting are rejected, the person or body applying for the annulment of the general assembly resolution must have a legal interest in doing so. [18] In cases where legal interest exists, an annulment lawsuit can also be filed against rejection resolutions adopted by the general assembly.

g) Parties to the Annulment Lawsuit

As explained above, an annulment lawsuit is a constitutive lawsuit. Unlike cases of nullity or non-existence, the general assembly resolution subject to annulment is formally a valid resolution. Therefore, it remains effective until annulled by the court, and following the court’s annulment decision, it is deemed null and void from the outset along with all its consequences. The persons entitled to file an annulment lawsuit are regulated under Article 446 of the Turkish Commercial Code (TCC). The persons who may file an annulment lawsuit are as follows:

• Shareholders who were present at the meeting voted against the resolution, and had their dissent recorded in the minutes,
• Shareholders, whether present at the meeting or not, whether they cast a negative vote or not, who claim that the notice was not duly made, the agenda was not properly announced, unauthorized persons or their representatives participated and voted at the meeting, or that they were unjustly denied the right to participate and vote, and assert that these irregularities affected the adoption of the general assembly resolution,
• The board of directors,
• Each member of the board of directors, if the implementation of the resolutions would result in personal liability.

Accordingly, shareholders, the board of directors, and, in the cases specified in the TCC, each member of the board of directors may file an annulment lawsuit.

i. Filing of Annulment Lawsuit by a Shareholder

Pursuant to Article 446/1-a of the Turkish Commercial Code (TCC), a shareholder may file an annulment lawsuit only if, except for exceptional cases, they were present at the meeting, voted against the resolution, and had their dissent recorded in the minutes. These exceptions are specified in Article 446/1-b of the TCC, as mentioned above. Apart from these exceptions, it is crucial for the shareholder to be present at the meeting, vote negatively, and have their dissent recorded in the minutes. Even if these conditions are met, a shareholder whose name is not on the attendance list of the meeting cannot file an annulment lawsuit regarding the relevant general assembly resolution. [19] Shareholders who are deprived of voting rights or who hold usufruct rights over shares cannot cast a negative vote but may fulfill the conditions required to file an annulment lawsuit by having their dissent recorded in the minutes. It is also important to note that although it is not mandatory to state reasons for the dissent, a shareholder who provides reasons in their dissent is not bound by those reasons in the annulment lawsuit and may request annulment of the general assembly resolution based on different claims and grounds.

ii. Filing of Annulment Lawsuit by the Board of Directors

Pursuant to Article 390 of the Turkish Commercial Code (TCC), the board of directors must adopt a resolution by majority vote in order to file an annulment lawsuit. In addition, for the board of directors to file an annulment lawsuit, the general assembly resolution must be in violation of the law, the articles of association, and the principle of good faith. The board of directors is an administrative body responsible for defending and protecting the rights of the joint-stock company and is therefore entitled to file an annulment claim in the presence of such violations. Indeed, in these cases, filing an annulment lawsuit by the board of directors is both a right granted to it by the TCC and a duty imposed upon it by the same code. [20]

iii. Filing of Annulment Lawsuit by Members of the Board of Directors

Members of the board of directors may request the annulment of the relevant general assembly resolution only if personal liability will arise from the execution of that resolution. In practice, this lawsuit is generally filed against decisions not to grant discharge to the board members. However, another important issue to consider here is whether a liability lawsuit has been filed against the board member. Since the discharge decision will be examined in the liability lawsuit, the annulment lawsuit filed to annul this decision is likely to be dismissed. [21]

Article 445 of the Turkish Commercial Code (TCC) does not provide a clear and direct rule regarding against whom the annulment lawsuit should be filed. However, similar to declaratory lawsuits that can be filed due to nullity or voidness, the annulment lawsuit must be filed against the legal entity of the joint-stock company.

h) Duration, Procedure, Judgment, and Consequences of the Annulment Lawsuit

Pursuant to Article 445 of the Turkish Commercial Code (TCC), an annulment lawsuit must be filed within three months from the date of the general assembly resolution. This period is of a forfeiture nature, meaning that if the period lapses, the general assembly resolution remains valid even if it is contrary to the law, the articles of association, or the principle of good faith. [22] Since the three-month period is of a forfeiture nature, the court must ex officio examine whether the lawsuit was filed within the prescribed period. [23] In this respect, the annulment lawsuit differs from declaratory lawsuits filed due to nullity or voidness.

According to Article 445 of the Turkish Commercial Code (TCC), the competent court for annulment lawsuits is the commercial court of first instance, and the authorized court is the court located in the place where the company’s headquarters are situated. The regulation regarding which local court has jurisdiction over annulment lawsuits is of a mandatory jurisdictional nature. Therefore, it must be regarded as an absolutely imperative provision. Consequently, no jurisdiction agreement can be made regarding the competence of the courts, nor can any provision on this matter be included in the articles of association.

Pursuant to Article 1521 of the Turkish Commercial Code (TCC), “In commercial companies, the simplified trial procedure shall be applied in lawsuits arising from the partnership or shareholding relationship between partners or shareholders and the company, or between partners or shareholders themselves, as well as in lawsuits filed against members of the board of directors, managers, directors, liquidators, or auditors.” Accordingly, the simplified trial procedure is adopted in annulment lawsuits.

Pursuant to Article 448 of the Turkish Commercial Code (TCC), if an annulment lawsuit is filed against a general assembly resolution, the board of directors must duly announce the filing of the lawsuit and the hearing date by publishing it in the Trade Registry Gazette. If the legal entity has a website, the announcement must also be published on that website. The court may require the plaintiffs to provide security.

In the event of filing an annulment lawsuit against general assembly resolutions, the court must be informed of the grounds for annulment on which the lawsuit is based. [24]

In joint-stock companies, annulment lawsuits filed against general assembly resolutions are subject to appeal and cassation. Plaintiffs may apply for appeal and cassation by adhering to the statutory time limits stipulated by the Code of Civil Procedure (HMK).

In joint-stock companies, just as in declaratory lawsuits that can be filed due to nullity or voidness of general assembly resolutions, the court may also seek the opinions of board members in annulment lawsuits filed against general assembly resolutions, pursuant to Article 449 of the Turkish Commercial Code (TCC). As a result, the court may decide to postpone the resolution in question. Only the appeal process is available against this decision, and the plaintiff may appeal the postponement decision within the statutory period specified by the Code of Civil Procedure (HMK).

Filing an annulment lawsuit against a general assembly resolution does not preclude the enforceability of the resolution. Therefore, in the event of filing an annulment lawsuit, a request for a stay of execution may be submitted to the court where the lawsuit is filed; if the lawsuit has not yet been filed, this request may be made to the commercial court of first instance located at the headquarters of the joint-stock company. In this way, by preventing enforceability, potential damages to the joint-stock company and related parties can be avoided if the resolution is indeed subject to annulment.

If the court decides that the contested resolution must be annulled and this court judgment becomes final, the decision will have binding effect on all shareholders. In other words, this final decision will also affect other shareholders who are not parties to the lawsuit. Pursuant to Article 450 of the Turkish Commercial Code (TTK), the board of directors is obliged to obtain a copy of this decision and immediately register it with the trade registry and publish it on the legal entity’s website. Additionally, the board of directors is obliged to promptly execute the annulled general assembly resolutions. As explained above, the general assembly resolution annulled by the court decision shall be deemed null and void with all its consequences from the date it was adopted. If the annulment lawsuit was filed in bad faith, the plaintiffs shall be jointly and severally liable for the damages incurred by the company pursuant to Article 451 of the TTK.

1. CONCLUSION

The most important difference between the annullability situation and nullity or voidness is that, until the annulment decision is rendered, a valid legal act exists. The violation identified as non-compliance is not limited solely to the provisions of the Turkish Commercial Code No. 6102 but also includes other applicable legislation. A lawsuit that can be filed for the annulment of a general assembly resolution that contains at least one of these violations is called an annulment lawsuit. This annulment lawsuit is of a constructive nature. According to Article 445 of the Turkish Commercial Code (TTK), the annullability must be asserted through litigation within a three-month statutory limitation period starting from the date of the general assembly resolution. In contrast, the sanctions of nullity and voidness can be challenged indefinitely by objection and, if understood from the existing circumstances, can also be recognized ex officio by the court. Both annulment and declaratory lawsuits are filed against the legal entity of the joint-stock company at the commercial court of first instance located where the company’s headquarters is situated. The annulment lawsuit is regulated in Articles 445 and 446 of the Turkish Commercial Code No. 6102. Accordingly, shareholders, the board of directors, and members of the board of directors may file an annulment lawsuit. However, except for the exceptions specified in Article 146/1-b of the Turkish Commercial Code No. 6102, shareholders may file an annulment lawsuit only if they are present at the meeting, have voted against the resolution, and have recorded their dissenting opinion in the minutes. A declaratory lawsuit based on nullity or voidness may be filed by any person who has a legal interest.

Although the invalidity cases are regulated by the Turkish Commercial Code No. 6102, there are many differing opinions in the doctrine regarding ambiguous or unaddressed elements, and case law has also been established through Supreme Court decisions. Essentially, the aim of the Turkish Commercial Code No. 6102 is to protect the legal personality of the joint-stock company. For this reason, the legal remedies available against general assembly resolutions have been extensively detailed, and some provisions contain ambiguous expressions. Consequently, even for joint-stock companies, which are widespread in commercial life, there is significant debate and varying views in the doctrine. Therefore, it is clear that more detailed and specific regulations are needed in practice to ensure the smooth functioning and continuity of joint-stock companies, as well as to protect the rights of shareholders and persons with legal interests.

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