Background
A shareholder in the defendant joint-stock company died on June 18, 2019. Six days later, the company held a general meeting without notice under Article 416 of the Turkish Commercial Code. The deceased shareholder’s estate was not represented by an estate representative, and not all heirs attended. Some heirs nevertheless participated on the basis of unfinalized inheritance shares, even though the estate had not been divided.
One heir sued to establish that the resolutions adopted at the June 25, 2019 meeting were legally nonexistent. The company argued that the claimant was not a shareholder, lacked standing, and had lost any relevant rights after the board refused in September 2019 to register the claimant’s inherited shares and offered to purchase them at their asserted fair value under Article 493. The İstanbul Anadolu 8th Commercial Court accepted the claim, holding that the undivided estate should have been represented at the no-notice meeting and that the requirements of Article 416 had not been satisfied. The company appealed.
The Court’s Holding
The 12th Civil Chamber rejected the appeal on the merits and affirmed the judgment. Article 416 permits a general meeting to proceed without the prescribed notice only when all shareholders or their representatives are present and none objects to that procedure. Because the deceased shareholder’s undivided estate was represented neither by an estate representative nor by all heirs, the statutory condition of complete representation was absent. The meeting therefore had to be treated as never having been duly held, making all resolutions adopted there legally nonexistent.
The court also held that the claimant had standing and a legal interest as an heir. Until the heirs’ joint ownership of the estate was dissolved through a division agreement or an equivalent legally sufficient arrangement, the company could not rely on Article 493(4) to say that the claimant had lost shareholder rights. Exercise of the company’s Article 493 rights required the heirs to apply to the company collectively and properly. Finally, a legally nonexistent resolution does not become valid merely because six years have passed, and invoking its nonexistence after that period was not an abuse of rights.
Key Takeaways
- A no-notice general meeting under Article 416 requires the presence of every shareholder or representative and the absence of any objection to proceeding without notice.
- Shares belonging to an undivided estate must be represented through the estate; selected heirs cannot independently supply the representation needed for a no-notice meeting.
- A company cannot invoke Article 493(4) against an individual heir before joint ownership has been dissolved and the heirs have collectively made a procedurally valid application.
- General-meeting resolutions that are legally nonexistent do not become valid through the passage of time, and asserting their nonexistence years later is not, by itself, an abuse of rights.
Why It Matters
The decision underscores the strictness of Turkey’s unanimity-based exception permitting corporate general meetings without notice. When a shareholder has recently died, companies must determine whether the estate has been properly represented before relying on Article 416; participation by only some heirs will not cure the defect while the inherited shares remain jointly owned.
The ruling also distinguishes later restrictions on registration or transfer of inherited shares from the estate’s status at an earlier general meeting. A subsequent board decision under Article 493 cannot retroactively validate a meeting held without representation of the deceased shareholder’s estate.