Authors: Corporate Law Department, Atty. Mustafa Şahin

The general assembly is a mandatory corporate body through which shareholders of a joint-stock company directly exercise their rights concerning the management of the company and at which the company’s fundamental decisions are adopted. Matters such as the election of board members, approval of financial statements, determination of the use of profits, amendments to the articles of association, capital increases or reductions, and structural transactions including mergers and demergers fall within the powers of the general assembly. Accordingly, the rights of shareholders to attend general assembly meetings, obtain information concerning agenda items, express their opinions and exercise their voting rights constitute fundamental shareholder rights under joint-stock company law.

However, the presence of investors in different cities and jurisdictions and the expansion of shareholder structures, particularly in publicly held companies, have rendered the traditional meeting model based solely on physical attendance increasingly insufficient. In response to this need, Turkish Commercial Code No. 6102 (“TCC”) introduced the possibility of electronic participation in general assembly meetings of joint-stock companies.

The Electronic General Assembly System (“e-GAS”) enables shareholders to follow general assembly meetings remotely, submit their opinions and proposals, appoint representatives and exercise their voting rights electronically. The e-GAS is not merely a technical instrument enabling shareholders to watch meetings online. It is a general assembly participation system regulated by legislation, under which acts performed electronically produce the same legal consequences as acts performed through physical attendance.

I. Legal Basis and Scope of Application

The principal legal basis of the electronic general assembly system is Article 1527 of the TCC. Pursuant to Article 1527/5, electronic participation in general assembly meetings, submission of proposals, expression of opinions and voting produce all legal consequences of physical attendance and voting. Votes cast electronically must therefore be taken into account together with physical votes when calculating the meeting and decision quorums. Opinions, proposals and dissenting statements submitted electronically also constitute the exercise of shareholder rights at the general assembly.

The detailed rules are set out in the Regulation on General Assembly Meetings of Joint-Stock Companies to Be Held Electronically (“Regulation”) and the Communiqué on the Electronic General Assembly System to Be Applied at General Assembly Meetings of Joint-Stock Companies (“Communiqué”). Under the applicable framework, the general assembly meeting is opened simultaneously in the physical and electronic environments. Accordingly, the e-GAS is a hybrid participation model enabling simultaneous remote participation in a physically convened meeting, rather than a fully virtual meeting replacing the physical general assembly.

The use of the electronic participation system is mandatory for joint-stock companies whose shares are monitored in dematerialised form by the Central Securities Depository of Türkiye (“MKK”) and listed on a stock exchange. In these companies, electronic participation, appointment of representatives, expression of opinions and voting are carried out through the system provided by MKK.

For non-listed joint-stock companies, implementation of the e-GAS is optional. Such companies may establish a system compliant with the applicable legislation or obtain services from an authorised service provider. However, once a company incorporates electronic participation into its articles of association, it may not apply the system only to selected meetings or shareholders. It becomes obliged to provide electronic participation at all subsequent general assembly meetings.

II. Articles of Association and Technical Infrastructure

The Regulation requires joint-stock companies implementing the e-GAS to include a provision concerning electronic participation in their articles of association. The model provision states that persons entitled to attend the general assembly may participate electronically pursuant to Article 1527 of the TCC and that the company may establish a system or procure services enabling electronic participation, expression of opinions, submission of proposals and voting.

The purpose of this mandatory provision is to prevent electronic participation rights from being made subject to conditions varying between companies or being restricted through the articles of association. Accordingly, electronic participation may not be limited to particular share classes, made subject to the permission of the board of directors or otherwise restricted.

Where a non-listed company establishes its own electronic general assembly system, compliance of the system with the applicable legislation must be certified through a technical report issued by an authorised institution. The report must be registered with and announced by the trade registry. Service providers are likewise required to document their technical compliance and complete the relevant Ministry procedures.

The system must comply with requirements relating to information security, personal data protection, secure electronic signatures, long-term archiving, backup and disaster recovery. An ordinary video-conferencing application therefore cannot qualify as an electronic general assembly system within the meaning of Article 1527 of the TCC. The system must support all required functions, including identity verification, appointment of representatives, submission of opinions, voting, recording of dissenting statements and secure retention of records.

III. Pre-Meeting Preparations and Electronic Participation

Companies implementing the e-GAS must make the general assembly invitation, agenda and all documents required to be submitted for shareholder review available through the system within the statutory periods and with a secure electronic signature. The annual report of the board of directors, financial statements, profit distribution proposal and other agenda documents must be accessible through the system to ensure the effective exercise of shareholders’ rights to information and examination.

Documents made available electronically must not differ in substance from those available for physical inspection. Providing electronic participants with incomplete or delayed information may result in unequal treatment and prevent shareholders from exercising their voting rights on an informed basis.

A shareholder wishing to attend electronically, either in person or through a representative, must notify this preference through the e-GAS. The shareholder may withdraw the electronic participation request within the applicable period. A shareholder or representative who has not withdrawn the request may not also attend physically, thereby preventing duplicate participation and voting in respect of the same shares.

A shareholder may participate electronically through a representative. In such case, the representative’s identity information and any voting instructions must be recorded in the system. Transactions made on behalf of a legal entity shareholder must be carried out by an authorised representative using a secure electronic signature.

IV. Conduct of the Meeting, Expression of Opinions and Voting

Access to the system for electronic participation opens at 06.00 on the date of the meeting and closes five minutes before the announced starting time. Electronic participants are included in the list of attendees and taken into account together with physical participants when calculating the meeting quorum.

The meeting is opened simultaneously in the physical and electronic environments. The meeting chair may appoint technical experts to perform system-related procedures. However, the appointment of technical personnel does not eliminate the duties and responsibilities of the meeting chairmanship concerning the lawful conduct of the meeting.

A shareholder or representative participating electronically may submit written opinions concerning the agenda item under discussion. Under the Communiqué, no more than two opinions may be submitted for each agenda item, and each opinion may contain no more than 600 characters.

Since electronic participation produces the same legal consequences as physical attendance, opinions and proposals submitted through the system must be taken into consideration during the meeting. Treating electronic participants merely as passive viewers would be inconsistent with the purpose of Article 1527 of the TCC.

Electronic voting is carried out after the meeting chair opens the relevant agenda item for voting. Physical and electronic voting must commence simultaneously, each agenda item must be voted on separately, and electronic votes must be submitted within two minutes. A vote cannot be amended after it has been transmitted to the system.

Electronic votes are assessed together with physical votes. The meeting chair must record the overall voting result and dissenting statements submitted electronically in the general assembly minutes.

V. Dissenting Statements, Retention of Records and Evidence

For the purposes of bringing an action for annulment against a general assembly resolution, it is important for a shareholder to vote against the resolution and have the dissenting opinion recorded in the meeting minutes. A shareholder participating electronically may submit a dissenting statement through the system, and the meeting chairmanship must ensure that it is accurately reflected in the minutes.

Failure to record a dissenting statement duly submitted through the system may interfere with the shareholder’s ability to exercise the right to bring legal proceedings. In such circumstances, the e-GAS records may constitute important evidence demonstrating that the dissenting statement was submitted duly and on time.

The company or service provider must retain all records relating to transactions carried out through the e-GAS and the identity details of electronic participants for ten years while preserving their confidentiality and integrity. In listed companies, this obligation is fulfilled by MKK.

System records make it possible to determine the capacity in which a shareholder attended the meeting, the votes cast in relation to each agenda item and the time at which opinions or dissenting statements were submitted. Such records may perform an important evidentiary function in disputes relating to general assembly resolutions.

VI. Technical Disruptions, Liability and Actions for Annulment

One of the most significant legal issues concerning the e-GAS is the effect of technical disruptions on general assembly resolutions. Interruption of internet connectivity, failure of audio or video transmission, inability to access the system or inability to submit a vote may interfere with shareholders’ rights to attend and vote.

Not every technical disruption automatically invalidates the general assembly resolutions. Its legal consequences must be assessed by reference to the source, scope and duration of the problem and its effect on the exercise of shareholder rights. A system-wide failure attributable to the company or service provider that prevents a substantial number of shareholders from attending or voting may prevent the meeting from continuing lawfully.

Where the meeting or decision quorum cannot be determined accurately, electronic participants cannot follow the meeting or voting rights cannot be exercised, continuing the meeting without resolving the problem may create significant legal risks. Depending on the circumstances, the meeting may need to be suspended or postponed until the disruption is remedied.

The fact that the company obtains the system from a service provider does not eliminate its obligations towards shareholders. The primary obligation to provide electronic participation rests with the company. Where the service provider is technically at fault, contractual or tortious liability of the service provider may also arise.

Pursuant to Article 445 of the TCC, an action for annulment may be brought against general assembly resolutions that are contrary to the law, the articles of association or the principle of good faith. A shareholder who has been unjustifiably prevented from attending or voting may also bring an action for annulment if the irregularity affected the adoption of the relevant resolution.

This rule applies equally to electronic general assemblies. However, not every disruption automatically results in the annulment of all resolutions. The percentage of affected shares, the majority by which the resolution was adopted and the overall effect of the irregularity on the meeting must be taken into consideration.

VII. Information Security and Corporate Governance

The e-GAS involves the processing of significant categories of data, including the identity details of shareholders and representatives, shareholding amounts, voting preferences and dissenting statements. Accordingly, the operation of the system is important not only from a company law perspective but also in terms of information security and personal data protection.

Companies and service providers must process personal data solely for the purposes of conducting the general assembly and fulfilling statutory obligations. Unauthorised disclosure, use of data for unrelated purposes or retention without adequate security measures may give rise to legal liability.

The electronic general assembly system contributes to the effective exercise of shareholder rights by reducing the obstacles created by geographical distance and participation costs. Nevertheless, its corporate governance benefits depend on whether electronic participants are genuinely able to express opinions, ask questions and exercise voting rights, rather than on the system being established merely as a formality.

Conclusion

The electronic general assembly system is a comprehensive legal mechanism enabling shareholders of joint-stock companies to exercise their rights to attend general assembly meetings, express opinions, submit proposals and vote through electronic means. By recognising that acts performed electronically produce the same legal consequences as physical participation, Article 1527 of the TCC has made electronic participation an integral part of Turkish joint-stock company law.

The use of the e-GAS provided by MKK is mandatory for listed companies. Other joint-stock companies may voluntarily implement the system by incorporating the necessary provision into their articles of association and establishing a compliant system or obtaining services from an authorised service provider.

For lawful implementation, meeting documents must be uploaded to the system on time, participation and representation notifications must be processed correctly, physical and electronic participation must operate simultaneously, votes must be cast securely, dissenting statements must be reflected in the minutes and records must be retained securely.

Companies should therefore approach the e-GAS not merely as a technical meeting tool, but as a comprehensive compliance process directly connected with the protection of shareholder rights, corporate governance, information security and the validity of general assembly resolutions.