Annulment of General Assembly Resolutions

Also known as: Annulment Action, Nullity of Resolutions, Challenge to Shareholders' Resolutions, Genel Kurul Kararının İptali

Author Ali Gül

In short

The annulment by a court, in an action brought within three months of the resolution, of general assembly resolutions contrary to the law, the articles or good faith; and in serious cases, the nullity of the resolution.

Annulment of general assembly resolutions is the setting aside by a court of general assembly resolutions contrary to the Code, the articles or good faith (TCC Art. 445). It is the main remedy for shareholders, especially the minority, against unlawful majority resolutions.

Grounds

Breach of the Code or the articles (for example, quorums not observed, a resolution on a matter not on the agenda),
Breach of good faith; especially majority resolutions harming the minority without a legitimate company interest,
Procedural defects: improper notice of the meeting, obstruction of the right to information.

Who May Sue?

Shareholders who voted against and had their dissent recorded in the minutes,
Shareholders wrongly refused entry or claiming the notice or agenda was not properly given,
The board of directors; individual board members if implementing the resolution would make them personally liable (TCC Art. 446).

Time Limit and Court

The action must be brought within three months of the resolution, before the commercial court of first instance where the company has its seat. The time limit is strict. The filing of the action and the hearing date are announced by the board. An interim injunction may be sought to suspend implementation of the resolution.

Nullity and Non-existence

Resolutions restricting or removing a shareholder’s inalienable rights, undermining the basic structure of the joint stock company or breaching capital maintenance rules are null (TCC Art. 447). The three-month limit does not apply to nullity; a declaration of nullity may be sought at any time. Resolutions lacking constitutive elements, such as where no meeting was held at all, are non-existent.

Similar rules apply to limited liability company general assembly resolutions. These actions are commercial cases.

Frequently Asked Questions

When must an annulment action be brought?

Within three months of the resolution. This is a time limit; after it expires, the resolution cannot be annulled. However, it does not apply to null resolutions, and a declaration of nullity may be sought at any time.

Can a shareholder who did not attend the meeting bring an annulment action?

As a rule, shareholders who voted against and had their dissent recorded may sue. A shareholder who did not attend may only sue by claiming they were not duly invited, the agenda was not properly announced or unauthorised persons took part in the resolution.

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