Introduction
What happens if an ordinary general assembly meeting is not held in limited companies? This article aims to clarify the questions of the obligation for limited companies to hold an annual ordinary general assembly meeting, who will be responsible if this obligation is not met, and what the possible legal, criminal, and administrative sanctions are, in light of various judicial decisions presented. The examined decisions reveal that the legal framework and judicial practice regarding the matter are consistent and clear. The article will offer a holistic perspective by synthesizing the findings obtained from these decisions, emphasizing different perspectives and important details.
1. The holding of an ordinary general assembly meeting in limited companies‘s legal basis and the compulsory nature of the meeting
The obligation for limited companies to hold an annual ordinary general assembly meeting is based on Article 617 of the Turkish Commercial Code (TCC). This article stipulates the provision, “The ordinary general assembly meeting is held within three months from the end of each fiscal year.” Many decisions, in addition to this provision for limited companies, also refer by analogy to Article 409 of the TCC concerning joint-stock companies. Istanbul 2nd Commercial Court of First Instance (2022/874) clearly states this obligation: “In limited companies, ordinary general assembly meetings are held within three months from the end of each fiscal year, according to the provision of TCC Art. 617/para. 1. In this context, the ordinary general assembly meeting is a meeting that must be held every year.”
The purpose of these meetings is “to deliberate and make decisions regarding the election of organs, financial statements, the annual report of the board of directors, the distribution of profit…” Therefore, not holding the meeting means suspending the company’s most fundamental operating mechanisms and the rights of the partners.
2. Who is responsible for not holding an ordinary general assembly meeting in limited companies? Company managers
The duty to call the general assembly meeting and the liability arising from the neglect of this duty are, without exception, imposed on the company directors in all decisions. This is a natural part of the directors’ duty of care and loyalty. In decisions, the nature of this duty is defined as “a non-delegable and inalienable duty belonging to the directors as a rule,” emphasizing the liability. Directors are “obliged to perform their duties with all due care and to protect the company’s interests within the framework of the rule of honesty,” and failure to hold the general assembly constitutes a violation of this obligation.
3. The Multifaceted and Graduated Structure of Sanctions
The consequences of not holding the general assembly have been addressed in decisions with a varied and, depending on the situation, escalating structure:
Legal Protection Mechanisms for Shareholders: The most common consequence is the shareholders’ right to apply to court. Shareholders, in accordance with Articles 411 and 412 of the TCC, may request permission from the court to convene the general assembly or demand the appointment of a trustee for this purpose. Antalya 4th Civil Court of Commerce (2021/320) In its decision, it is clearly seen that the court can appoint “a trustee to arrange the agenda and issue the call in accordance with the provisions of the Law.”
Personal Liability of Directors: Neglecting this duty leads to the personal liability of the directors.
Liability for Compensation: Istanbul Anatolian 13th Civil Court of Commerce (2024/530), referring to Article 553 of the TCC, states that directors “are liable for damages they cause to the company, shareholders, and company creditors if they violate their obligations arising from law and the articles of association through their fault.”
Dismissal of the Director: The failure to hold a general assembly may be considered a just cause for the dismissal of the director. Indeed, Istanbul Regional Court of Justice 12th Civil Chamber (2019/1135) in its decision, cited “the failure to hold general assemblies” as a justification for the existence of grounds for dismissal of directors.
Threats to the Company’s Existence: Prolonged negligence can even jeopardize the company’s legal entity status.
Dissolution of the Company: Konya 2nd Civil Court of Commerce (2024/387), based on Article 636/2 of the TCC, stated that partners or creditors may request the dissolution of the company “if one of the legally required organs of the company has not existed for a long time or if the general assembly cannot be convened.” The decision to dissolve a company that has not held a general assembly for approximately 16 years is a concrete example of how serious this sanction can be.
Action for Withdrawal from Partnership: In the decision of the İstanbul Anadolu 2. Asliye Ticaret Mahkemesi (2022/1050), it was stated that situations such as the general assembly not being held and measures regarding the company’s financial situation not being taken, could give rise to the right for other partners to “file a lawsuit for a decision to withdraw from the company in the presence of just cause” (TTK m.638/2).
Conclusion
A holistic analysis of the presented court decisions unmistakably reveals that the Turkish Commercial Law system attaches great importance to limited companies holding annual ordinary general assembly meetings. Beyond being a mere formality, this meeting is an indispensable mechanism for the company’s transparency, accountability, the protection of partners’ rights to information and supervision, and the healthy functioning of the company.
In case of violation of this legal obligation, responsibility rests directly and primarily with the company directors. The sanctions cover a rather wide range, ranging from partners ensuring the meeting is held through the court, to directors paying compensation, being dismissed, facing criminal sanctions, and in the most severe cases, the dissolution of the company. This situation clearly demonstrates that company directors must take their duty to hold general assembly meetings seriously. An article suggestion.
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The failure to hold an ordinary general assembly meeting in limited companies is not merely a simple oversight; it is a serious legal issue that gives rise to personal liability for the directors. Such situations can lead to disruptions in the company’s operations, conflicts among partners, and even severe sanctions that could result in the company’s dissolution. Therefore, it is essential for company partners, and especially the directors, to seek advice from an expert lawyer in the field before taking necessary steps in accordance with the Turkish Commercial Code and relevant court decisions.
Lawyers specialized in commercial law and company law, such as Tuzla lawyer, Pendik lawyer, Kartal lawyer, Maltepe lawyer, Gebze lawyer, Çayırova lawyer, Tepeören lawyer, Orhanlı lawyer, can guide your company in fulfilling its legal obligations. Many technical details, especially the timely holding of the ordinary general assembly, the correct application of the summoning procedure, and the preparation of meeting minutes to be legally valid, require professional legal support. Furthermore, it is of great importance to obtain preventive legal services to avoid risky processes such as potential partnership lawsuits, compensation, and dismissal lawsuits that may arise against the director due to the failure to hold a general assembly. A Tuzla lawyer with local experience or an expert lawyer in surrounding districts will help you determine the most accurate strategy by evaluating your company’s specific situation.
