Quorum requirements in the general assembly of limited liability companies

Limited liability companies, regulated following the regulations regarding other capital companies such as joint-stock companies and partnership limited by shares in the Turkish Commercial Code (TCC), are the most preferred type of company in our country. Limited liability companies have two compulsory organs, namely the general assembly and the board of directors. The general assembly plays a significant role in the company's life. In limited liability companies, the general assembly makes decisions directly affecting the fate of the company, such as appointing directors, approving financial statements, amendments to the articles of association, and dissolution of the company. For decisions taken in the general assembly of limited liability companies to be legally valid, the meetings shall be held in accordance with procedural rules, and relevant quorum requirements shall be met. However, the provisions in the TCC concerning the quorum requirements applicable in the general assemblies of limited liability companies are scattered, complex, and sometimes difficult to understand. This complexity brings many problems. Indeed, many legal issues related to the quorum requirements in the general assemblies of limited liability companies, which have become the preferred choice especially for small and medium- sized enterprises and family-owned companies, continue to be debated in both legal scholarship and practice. This study aims to systematically examine the quorum rules for the general assembly of limited liability companies, particularly addressing scattered provisions, frequently criticized areas in doctrine, points requiring interpretation, and to shed light on conceptual discussions in the doctrine, and to offer practical solutions for practitioners, as well as to explore what the quorum requirements in limited liability company general assemblies are and how they should be understood. To achieve this, the study has taken into account not only legislative texts but also the systematics of legislation, interpretation methods, comparative legal regulations, and judicial decisions. In the first part of the thesis, the historical development, structure, and fundamental concepts related to the general assembly of limited liability companies are discussed. Issues such as the powers of the general assembly, the principles of assembly, voting rights, and the right to participate in meetings have been examined, and the legal nature and functional classification of the quorum concept have been established to create a conceptual foundation. The quorum, one of the most significant concepts of our study, is essentially a fundamental institution encountered not only in corporate law but also in many areas where collective decision-making mechanisms exist. Hence, the quorum can be shown as perhaps one of the most critical institutions for the validity of decisions taken in associations, cooperatives, foundations, properties subject to condominium ownership, local administrative bodies, and even the Turkish Grand National Assembly. Despite its widespread occurrence, it is not possible to formulate a clear single-sentence definition of this institution. Moreover, adjectives such as relative, absolute, simple, qualified, basic, and ordinary used under the umbrella concept of majority are often used interchangeably, leading to ambiguity. To facilitate better understanding, this study examines quorums under different categories based on their functions, quorum ratios specified in norms, and the assessment base particular to limited liability companies. Among these categories, the most fundamental and critical distinction is based on functions. In this context, the meeting quorum, intended to give general assemblies a forum quality and ensure a certain degree of representation to allow agenda items to be discussed democratically, can be defined as the minimum participation rule required for a gathering to be legally considered a general assembly and for the assembly to constitute decision-making authority. As for the decision quorum, there is no scholarly consensus regarding its definition and function. According to our study's conclusion, it is possible to define the decision quorum as the norm determining the majority required for forming an affirmative or negative intention and for determining the direction of this intention in a general assembly meeting where either the required meeting quorum is achieved, or a meeting quorum is not sought at all. In the second part of our study, quorum rules specific to limited liability companies were explored under two primary categories: (i) meeting quorum, (ii) decision quorum and combined quorum rules. Initially, it was determined that the general rule in limited liability company general assemblies is that no meeting quorum is required, with the main exceptions being non-notified general assemblies, cases where the articles of association stipulate a meeting quorum, and situations where combined quorum norms apply. Thereafter, based on the fact that articles 589, 620 and 621 TCC articles shape the norms of decision quorum (and combined quorum) in limited liability companies, article 620 regarding ordinary decisions, article 589, which introduces the basic rule for amendments to the articles of association, and article 621, concerning important decisions, some of which simultaneously constitute amendments to the articles of association, have been examined. Within this framework, the meanings of certain expressions and rules established by these provisions were identified, also noting different doctrinal views. Among these norms, the most contentious is arguably TCC article 621/1. Based on reasons explained in our study, it was concluded that this provision constitutes a combined (double) quorum rule, meaning both conditions required by article 621/1 shall cumulatively be satisfied to pass important decisions. The study also addressed quorum requirements for general assembly resolutions imposing additional or ancillary obligations or increasing existing ones, restructuring decisions found in the TCC, and quorum rules applicable to limited liability companies undergoing liquidation. Additionally, the possibility of altering quorum norms via the articles of association was discussed. It was determined that ordinary quorum rules can be either made stricter or eased, but qualified quorum rules cannot be eased. Furthermore, it was concluded that contrary to the assertions in doctrine, the rule set forth in TCC article 621/2 was correctly translated from Swiss law without error. The study also examined the possibilities of decision-making by circulation in limited liability companies, unlike joint-stock companies, and addressed the relationship between TCC article 589 and article 621/1. In evaluating the relationship between these two norms, it was concluded that the coexistence of both provisions in the TCC does not result in a legislative gap. However, it was argued that the legislator's different quorum requirements for different amendments to articles of association in limited liability companies (sometimes causing confusion as to which quorum requirement is stricter) was not a deliberate choice, leading to various recommendations proposed. Furthermore, the Court of Cassation's approach to TCC article 621/1 with respect to limited liability companies with two shareholders has been examined, and an attempt has been made to explain why the Court's case law on this point is flawed. As our study progresses, attention has been focused on TCC article 408/2-f, a provision that has given rise to considerable debate in practice. The discussion centers on whether the authority to wholesale significant company assets in active companies should also rest with the general assembly in limited liability companies, and what the applicable quorum rule for such a decision should be. In the continuation of the second part of our study, given that numerous specific circumstances must be considered to determine whether quorum requirements are met in the general assemblies of limited liability companies, concepts such as privileged votes, casting votes, right of veto, exclusion of voting rights, and freezing of voting rights have been discussed, examining their impact on quorum requirements. In the final part of our study, an explanation is provided on how to determine whether the quorum for holding a meeting and making decisions has been reached. Subsequently, after briefly addressing the defects in general assembly decisions, it was concluded that the legal consequence for failing to comply with meeting and decision quorums is, in general, nullity. This study aims to provide both a systematic conceptual analysis at the academic level and practical guidance for practitioners. Particularly for lawyers drafting articles of association, directors managing general assemblies, and judicial bodies assessing the validity of decisions, the systematic structure and proposals presented in this thesis constitute a functional reference resource. Thus, the study aims to contribute to the development of Turkish commercial law beyond merely reviewing the literature.