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Electronic General Assembly: Amplifying the Shareholder Activism

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However, in listed companies where there are abundant number of shareholders, shareholders usually do not attend general assembly meetings for various reasons. Such reasons are including but not limited to: location of the meeting, attendance expenses, lack of protection for minority shareholders, lack of interest and enthusiasm or the belief that their vote would not matter.

To solve such problem, electronic general assembly meeting (“EGM”) system is offered as a remedy for the shareholders who do not attend the general assembly meetings in Turkey. EGM was first introduced as per the Turkish Commercial Code numbered 6102 and dated 14.02.2011 (“TCC”). EGMs are mandatory for the listed companies on Istanbul Stock Exchange (however they are not mandatory for public companies that are not listed on Istanbul Stock Exchange). Non-public companies may opt for an EGM as well though such system is not mandatory.

Important Matters to be taken into Account

  • Joint-stock companies who are mandated by the TCC to hold EGMs or who opt to hold EGM’s are required to stipulate their general assembly clause of articles of association identically as prescribed in the Regulation Regarding The Electronic General Assembly Meetings Of Joint Stock Companies.
  • Both a physical and an EGM shall be convened at the same time on the date of the general assembly meeting.
  • The government officer shall physically attend all EGMs as per the TCC. Some shareholders shall physically attend EGMs.
  • For the listed companies, the required software shall be supplied by the Central Registry and for the non-listed companies the required software may be developed by the company or outsourced.
  • The compatibility of the software system to be used during the meetings shall be evidenced by a technical report. Such technical report would be registered to the trade registry and be declared in the Trade Registry Gazette. The technical report shall be renewed every 2 years.
  • Call for general assembly meetings shall be conducted in accordance with the provisions of the TCC and articles of association.
  • EGM as an ordinary general assembly meetings shall be held within 3 months as of the end of each account term. Extraordinary general assembly meetings on the other hand are not subject to any time restraints as they are held when deemed necessary by the board of directors or minority shareholders.
  • Documents and information to be provided by the company to the shareholders before the general assembly meetings as per the TCC shall also be electronically provided through the software.
  • Access to the software by shareholders shall commence one hour before the starting time of the general assembly and ends five minutes before the starting time of the general assembly.
  • Electronic attendance shall be conducted through the software. Shareholders shall use their electronic signatures to access the software and attend the general assembly meeting. Such requirement shall not apply to the shareholders who are attending the meeting physically.
  • If a representative of the shareholder shall attend the meeting on behalf of the shareholder. Shareholder shall provide the representative's identity information to the software.
  • Identical to the physical general assembly eating each agenda item shall be voted separately and shareholders who attended EGM can cast their votes through the software.
  • The voting for agenda item shall last two (2) minutes.

A Success?

A new research[1] conducted after the Regulation Regarding The Electronic General Assembly Meetings Of Joint Stock Companies on the BIST-100 companies (listed) shows that shareholder participation to the general assembly meetings has increased. Although it is a positive direction towards better corporate governance, the many problems regarding corporate governance in Turkey still persist.

[1] Karayel, Mete, and Mehmet Alaaddin Koçak. "Türkiye’de anonim şirketlerde elektronik genel kurul sisteminin pay sahiplerinin yönetime katılımına etkileri: Bist 100 şirketlerinde bir araştırma." (2015).

 

Author: Batuhan Ecin

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