NEWSLETTER-2020-metin

30 NEWSLETTER 2020 Freezing of Voting Rights in Joint Stock Companies* Att. Yağmur Zeytinkaya The general assembly, one of two organs of a joint stock company pursuant to Turkish Commercial Code numbered 6102 (“TCC”), de- clares its will on company’s management through voting rights, which are used in the general assembly meetings. Among crucial matters, in that the shareholders have a right to vote, appointment or dismissal of the board members, appointment of auditors, resolving on the distribu- tion of dividends, and the liquidation of the company shall be noted. Pursuant to Article 434 of the TCC, even if the shareholder has only one share, each shareholder has at least one voting right. (For detailed information regarding voting rights, please refer to. 1 ) However, there are certain circumstances in which the voting right is blocked: Lack of voting right and freezing of voting right. In this newsletter article, freezing of voting rights, and the causes for such freezes are examined. The grounds for freezing of voting rights, which are regulated outside of the TCC, fall outside of the scope of this article. Freezing of Voting Rights under the TCC Under the TCC, certain cases of conflicts of interest are remedied with the “freezing” of voting rights, which is the most effective power of a shareholder regarding the management of a company. As an obvi- ous outcome of freezing of voting rights, the shareholders cannot use their voting rights. Also, such shares shall not be taken into account in the calculation of the quorums for general assembly meetings. Thus, such share becomes “invisible” before the company and, in certain ways, it is left outside of the game. Another principle on the freezing of voting rights is its permanent nature. Contrary to the lack of voting * Article of July, 2020 1 Erdem, Ercüment : “Recent Developments on Voting Rights under the new TCC” Erdem & Erdem Newsletter, August, 2011, http://www.erdem-erdem.av.tr/ publications/newsletter/innovations-in-the-new-turkish-commercial-code-con- cerning-voting-rights/.