The problems arising from the issue of convening a meeting of the board of directors in joint stock companies have been occupying the doctrine and the courts for a long time. It is generally accepted that the chairperson of the board of directors, or in his absence, the deputy chairperson, is authorized to convene a meeting. However, this general assumption does not prevent the chairperson from abusing his authority and turning the convening of the meeting into a crisis, especially in companies with different interest groups and conflicts. If the chairperson and the deputy chairperson of the board of directors refuse to convene a meeting, it is discussed whether the members may convene the meeting directly or through an application to the court, and remedies are sought to convene the board of directors. To put an end to these discussions and disputes, the legislator has made significant amendments to Article 392/VII of the TCC with the Law No. 7511 on the Amendment of the Turkish Commercial Code and Certain Laws. Accordingly, the chairperson has been granted discretionary authority to convene for individual requests and requests of a number of members that do not constitute a majority. Upon the request of the majority of the members, the chairperson is obliged to convene. In case the chairperson fails to comply with this obligation within a certain period, the requestors are authorized to make a direct convening. In this article, the amendments regarding the convening of the board of directors meeting are examined critically and comparatively with the regulations in some Continental European countries, and suggestions are made where the amendment is insufficient.
board of directors chairperson of the board of directors board of directors’ meetings convening of board of directors meeting
The problems arising from the convening for the BoD meeting in joint stock companies have been occupying the doctrine and the judiciary for a long time. It is generally accepted that the chairperson of the BoD, or in his absence, the deputy chairperson, is authorized to convoke a meeting. However, the authority granted to the chairperson, or, in his absence, his deputy or deputies does not prevent the chairperson from abusing his authority and turning the meeting convening into a crisis, especially in companies with different interest groups and conflicts.
Considering the discussions and difficulties experienced in practice, the legislator has made significant amendments to Article 392/VII of the Turkish Commercial Code No. 6102 with Article 15 of the Law No. 7511 on the Amendment of the Turkish Commercial Code and Certain Laws. Five more sentences have been added to the first sentence of the paragraph, and a gradual order has been introduced allowing the use of the convening authority by different persons in different possibilities. The Amendment, which differs significantly from the examples of France, Switzerland and Germany in continental Europe, constitutes one of the rare areas where the Turkish legislator has introduced a unique regulation in response to the needs of corporate law.
The application area of Article 392/VII-2nd sentence of the TCC is determined by Article 392/VII-3rd sentence of the TCC, which regulates the situation where the request is made by the majority. Accordingly, under Article 392/VII-2nd sentence of the TCC, the legislator authorizes the chairperson of the BoD, or in his absence, the deputy chairperson, whether to approve the request, and does not impose an obligation to convene. The Amendment does not provide a legal possibility for the convening to be made by the requestors. In our opinion, -de lege ferenda- any member whose request is rejected should be able to convene for a meeting, regardless of whether they constitute the majority of the BoD or not.
Art. 392/VII-3rd sentence and 4th sentence of the TCC sets a different regime depending on the condition that the request for a convening for a meeting is made in writing by the majority of the members of the BoD. The period granted to the chairperson is maximum thirty days following the receipt of the request. The consequence of failure to convene the BoD within this period in Art. 392/VII-4th sentence of the TCC is not appropriate. The meaning of “this period” in the previous sentence is “at the latest thirty days from the date of receipt of the request by the chairperson”. However, according to Article 392/VII-3rd sentence of the TCC, the obligation of the chairperson is to hold both the convening and the meeting within thirty days. Since the provision was not carefully drafted, in some cases, the claimants are not able to use the direct convocation authority. For this reason, the phrase “the board of directors was not convened within this period” in the provision should have been written as “the board of directors meeting was not held within this period”.
Since the provision requires that the chairperson of the board of directors “or” the deputy chairperson of the BoD cannot be reached, failure to reach one of the two seems to be sufficient to fulfil the direct convocation requirement. It is not correct that the hierarchy established by Art. 366/I of the TCC is not observed in Art. 392/VII-4th sentence of the TCC and only the deputy chairperson is allowed to be addressed.
On the other hand, it would be more appropriate to regulate the phrase “in cases where the chairperson of the BoD or the deputy chairperson cannot be reached” in Article 392/VII-4th sentence of the TCC as “in cases where the chairperson of the BoD, and in his absence, the deputy chairperson, or if there is more than one deputy chairperson, none of them can be reached”.
Pursuant to last sentence, the discussions on whether the convening procedure can be determined by the AoA in the pre-Amendment period, especially arising from Art. 340 of the TCC, are put to an end and it is adopted -accurately- that the AoA may be amended.
It should be noted that the Amendment also has an impact on limited partnership companies with capital divided into shares, cooperatives and limited liability companies.
What is important in the post-Amendment system is the principle of first applying to the chairperson, and in his absence, to the deputy chairperson. For this reason, a direct convocation of the meeting by the requesting member or members without any application to the chairperson or deputy chairperson renders the decisions taken at the relevant meeting -as a rule- null and void under the umbrella of Article 2 of the TCC.
On the other hand, it should not be deemed possible for one or a few members to organize a meeting and take decisions without making any application to the chairperson or by excluding certain members, even if the quorum is met. In such a case, the decisions taken by the BoD will also be inexistent.
