The Concept of Shareholder Activism
The concept of shareholder activism is defined as activities carried out by shareholders to influence a company for various purposes.[1] In this regard, shareholder activism may be conducted for a variety of purposes, such as influencing, directing, altering or improving a company’s shareholding and management structure, decision-making mechanisms, activities, policies, operations, strategies and performance; having a say in these matters; ensuring the company’s oversight and supervision; increasing the company’s market value; and strengthening its environmental, social and corporate governance (ESG) practices.[2] To achieve these objectives, Activist shareholders typically advance various requests, including removal of directors and appointment of new ones, detailed examination of financial statements, annual reports and audit reports, rejection of the release of directors and initiation of liability proceedings against directors, provision of information by the company regarding specific activities and investments, reduction of the remuneration of the company’s board of directors and senior executives as well as other operational expenses, adoption of certain policies by the company, distribution of dividends, buyback of shares by the company, improvement of the company’s compliance with corporate governance principles, and exit from the company; or they may resort to other means to exert pressure on the company’s board of directors or controlling shareholder.[3]
By its very nature, shareholder activism is carried out by one or more shareholders who do not possess the power to control the company on their own.[4] Furthermore, whilst the target of shareholder activism is often publicly listed companies, it can also arise in the context of privately held companies, although this may be relatively more challenging to do.[5] Dispersed and numerous nature of the shareholding structure, size of the accessible audience and the activist movement’s potential for growth, presence of shareholders with diverse characteristics such as institutional investors, capital market and stock exchange regulations applicable to publicly listed companies, availability of additional tools conducive to activism, and opportunity to benefit from the positive outcomes of activism due to the trading of company shares on the stock exchange could be listed among the reasons why shareholder activism generally finds application in publicly listed companies.
Shareholder Activism in Türkiye
Whilst it is difficult to say that shareholder activism is a common practice in Türkiye, it can be stated that it is a subject of considerable importance and is highly open to development.[6] In particular, in light of factors such as ongoing and expanding mergers and acquisition (M&A) transactions, foreign investments, significantly increasing number of initial public offerings (IPOs), joint ventures, start-up companies, venture capitals and angel investors in Türkiye, we assess that shareholders are adopting a more conscious and strategic approach to corporate activities, and that shareholder activism may consequently increase.
Available Rights and Tools under Turkish Law within the Framework of Shareholder Activism
Shareholders engaging in shareholder activism may exercise their statutory shareholder rights, as well as undertake activist activities through public statements, social media platforms or other communication channels, or by engaging directly with the company.[7] This article focuses primarily on certain rights and tools provided to shareholders under the Turkish Commercial Code (“TCC”). It should also be noted that the subject is addressed specifically in the context of joint-stock companies.
General Rights of Shareholders
The Right to Attend General Assembly Meetings and Cast Votes
Shareholders have the right to attend general assembly meetings, and to speak, express their views, make proposals and cast votes on agenda items during such meetings. Consequently, the most fundamental way for shareholders to play an active role in the company’s activities is to attend general assembly meetings, express their views on agenda items and cast their votes.
General assembly meetings are, as a rule, convened with shareholders holding at least 25% of the share capital, and decisions are taken by a majority of the votes cast by those present at the meeting, in accordance with the principle of majority rule. However, certain matters may be subject to qualified quorum requirements under the TCC or the company’s articles of association. Examples include amendments to the articles of association, creation of preference shares, restrictions on the transfer of registered shares, and wholesale of a significant portion of the company’s assets. Accordingly, in respect of certain specific resolutions requiring a qualified quorum, activist shareholders who do not hold a majority but possess a sufficient number of votes may be in a position to influence whether such resolutions are adopted or not.[8]
With regard to voting rights, particular attention must be paid to cases of exclusion from voting and suspension of voting rights. Pursuant to Article 436 of the TCC, which governs exclusion from voting, certain situations involving a conflict of interest result in the deprivation of voting rights. Accordingly, a shareholder may not vote on agenda items relating to a personal transaction or business between themselves, their spouse, their lineal descendants or ascendants, or companies in which they are a shareholder or controlling person on the one hand, and the company in question on the other. Furthermore, board members who are also shareholders are excluded from voting on agenda items concerning their own release.
As for the suspension of voting rights, this concept refers to situations where a shareholder’s voting rights cannot generally be exercised, irrespective of the specific agenda item. To give a few key examples:
- In companies forming a group of companies, where a share transfer causes a shareholder’s direct or indirect shareholding to reach or fall below the thresholds of 5%, 10%, 20%, 33%, 50%, 67% or 100%, the relevant transaction must be notified to the trade registry pursuant to Article 198 of the TCC, and such notification must be registered and published. If this notification is not made within the statutory time limits, the voting rights attached to the relevant shares are suspended.
- Furthermore, companies in a cross-shareholding relationship within a group of companies may, pursuant to Article 201 of the TCC, exercise only 1/4 of their voting rights, and all other shareholder rights of these companies, except for the right to acquire bonus shares, are suspended.
- Where a company acquires its own shares, such shares are not taken into account in the calculation of the meeting quorum pursuant to Article 389 of the TCC, and the voting rights attached to these shares are suspended.
In conclusion, among the fundamental actions that can be taken from the perspective of shareholder activism are actively participating in general assembly meetings and casting votes. With regard to meeting and decision quorums, shareholders must separately examine and take into account scenarios where voting rights are suspended or where shares may be deprived of voting rights.
The Right to Bring Legal Action Against General Assembly Resolutions
Action for Annulment
An action for annulment may be brought against resolutions of the general assembly that contravene the provisions of the law or the articles of association, and in particular the principle of good faith. For a shareholder to bring an action for annulment against a general assembly resolution, they must have been present at the general assembly meeting, voted against the resolution, and had their dissent recorded in the minutes. In addition, shareholders who allege that the invitation was not issued in accordance with the proper procedure, that the agenda was not duly published, that persons or representatives without the authority to attend the general assembly meeting participated and casted votes, that they were unjustly denied the right to attend the general assembly meeting and cast a vote, and that the aforementioned irregularities were influential in the adoption of the relevant general assembly resolution, may also bring an action for annulment regardless of whether they were present at the meeting or voted against the resolution. Such shareholders must file the action for annulment with the competent court within 3 months from the date of the resolution.
Accordingly, activist shareholders may file an action for annulment against general assembly resolutions that contravene the law, the articles of association or the principle of good faith, by casting a negative vote and having their dissent recorded in the minutes; and they may also request a stay of execution against the relevant resolution. Certain points must be observed regarding the recording of dissent in the minutes. Firstly, the dissent must be recorded in the minutes in a manner that leaves no room for doubt. Consequently, merely casting a negative vote or expressing an opinion against the decision is not deemed sufficient.[9] Furthermore, the dissent must be stated and recorded in the minutes after the discussion of each relevant agenda item and the adoption of the resolution, and not pre-emptively.[10]
Non-Existence and Nullity
Decisions taken at a meeting that cannot be classified as a general assembly meeting are deemed non-existent. For example, decisions where the meeting or decision quorum has not been met, or decisions taken without the presence of a Ministry of Trade representative, despite the requirement under the Regulation on the Procedures and Principles of General assembly meetings of Joint-Stock Companies and the Ministry Representatives to Be Present at Such Meetings (“the Regulation”) that the meeting be held in the presence of a Ministry representative, are deemed non-existent.[11] On the other hand, pursuant to Article 447 of the TCC, shareholders may bring an action for nullity against general assembly meeting resolutions that, in particular: (i) restrict or eliminate participation in the general assembly meeting, minimum voting rights, litigation rights and other inalienable rights arising from the law; (ii) restrict the shareholder’s rights to information, inspection and audit beyond the extent permitted by law; and (iii) undermine the fundamental structure of the joint-stock company or contravene the provisions on the protection of capital.
Actions for non-existence and nullity may be brought by all interested parties. Consequently, in cases of non-existence and nullity, activist shareholders may safeguard their interests by exercising their right to bring legal action against general assembly resolutions.
Right to Information and Inspection
Every shareholder has the right to obtain information from and inspect the company under Article 437 of the TCC. At least 15 days prior to the general assembly meeting, financial statements, consolidated financial statements, the activity report, the audit report and the dividend distribution proposal may be inspected by shareholders at the company’s headquarters and branches. Of these documents, the financial statements and consolidated financial statements must be kept available for inspection at the company’s headquarters and branches for a period of 1 year. Furthermore, shareholders may request copies of the income statement and the balance sheet, at the cost of the company.
Shareholders also have the right to obtain information and conduct an inspection at the general assembly meeting. During the general assembly meeting, shareholders may request information from the board of directors on the company’s affairs and from the auditors on the audit matters. The information provided in response to such a request must be diligent and truthful in accordance with the principles of accountability and good faith. The provision of the requested information may only be refused if it constitutes a trade secret or involves another corporate interest worthy of protection. However, if information has been provided to any shareholder outside the general assembly meeting, the same information must be provided upon a shareholder’s request at the general assembly meeting, even if it is unrelated to the agenda or constitutes a trade secret. This issue may arise in particular in situations where a majority or controlling shareholder who effectively controls the company possesses superior information compared to a minority shareholder.
Shareholders may also request the board of directors outside the general assembly meeting to inspect the company’s commercial books and correspondence in connection with questions raised at the general assembly meeting. For such an inspection to take place, a resolution of the board of directors on this matter is required.
If a shareholder’s request for information or inspection is left unanswered, unjustly rejected or postponed, the shareholder who is unable to obtain the desired information may apply to the competent court within 10 days of the rejection or, in other cases, within a reasonable period of time.
There is a general information asymmetry between shareholders and company management regarding the company’s activities. From the perspective of shareholder activism, access to such information may be necessary for these activities to be carried out.[12] Consequently, activist shareholders may play an active role in the company’s operations by exercising their rights to obtain information and conduct inspections on matters such as the activities, accounting, financial position and performance, reports prepared, and related-party transactions of the company and its subsidiaries, and may direct their activist efforts in light of the information obtained. Where a request for information is unjustly refused, they may aim to ensure the company’s supervision and oversight by bringing a claim before the competent court.
Liability Claims Against Board Members
As the company’s governing body, the board of directors is subject to duties of care and loyalty and must perform its duties in the interests of the company. In this regard, activist shareholders may bring a liability claim against board members for damages caused by their fault. For shareholders to be entitled to bring a liability claim, they must not have voted in favour of the release of the relevant directors on the agenda at the general assembly meeting. It should also be noted that shareholders who acquire shares with knowledge of the release decision will lose their right to bring a claim.
Website
Companies subject to independent audit are required, pursuant to Article 1524 of the TCC, to establish a website and to publish the required notices and certain other content on that website within the time period specified in the TCC, if any, or, where no such period is specified, within a maximum of 5 days from the date of the relevant transaction or the date of registration and publication. Failure to comply with this obligation may result in the relevant decisions being voidable and may give rise to liability on the part of the directors.
Minority Rights
Shareholders holding 10% of the capital in non-public companies and 5% of the capital in publicly listed companies are classified as minority shareholders. Shareholders constituting a minority may exercise the various rights granted to them under the TCC.
Right to Add Items to the Agenda
Subject to statutory exceptions, the principle of adherence to the agenda applies to general assembly meetings under Turkish company law. Consequently, matters not included on the agenda cannot, as a rule, be discussed or decided upon at the general assembly meeting.
Minority shareholders may, under Article 411 of the TCC, request the board of directors to convene a general assembly meeting or, if a general assembly meeting is already to be held, to insert certain items on the agenda that they wish to have decided upon, by stating the compelling reasons and the relevant agenda items. This request must be submitted to the board of directors via a notary public.
If the board of directors accepts the request, the general assembly meeting shall be convened to take place within 45 days at the latest. Otherwise, the convocation may be effected by the applicants themselves. If the board of directors rejects the request or fails to provide a positive response within 7 working days, the minority shareholders in question may apply to the competent court for the convening of the general assembly meeting. If the court deems the request appropriate, it may appoint a trustee to prepare the agenda and issue the notice, and the trustee shall carry out the relevant procedures.
Right to Request the Appointment of a Ministry Representative
Minority shareholders may, pursuant to Article 35(3) of the Regulation, request the company to appoint a Ministry representative for general assembly meetings where the presence of a Ministry representative is not otherwise mandatory, by notifying the company of their reasons. The company is required to forward this request to the appointing authority. If a Ministry representative is appointed in this manner, any general assembly resolutions adopted in the absence of the Ministry representative shall be invalid.
Action for the Removal of the Auditor
Minority shareholders may, pursuant to Article 399(4) of the TCC, request the competent court to remove the auditor and appoint a replacement. For such a request to be admissible, there must in particular be legitimate doubt as to the auditor’s impartiality or a just cause relating to the auditor personally.
Right to Postpone the Discussion of Financial Statements
Minority shareholders may, under Article 420 of the TCC, request the postponement of the discussion of financial statements and related matters during the general assembly meeting. No justification is required for this request.[13] It should be noted that, pursuant to Article 413 of the TCC, the removal of board members and the election of new ones are considered matters connected to the discussion of financial statements. Furthermore, agenda items concerning the board of directors’ annual report, the auditor’s report, the discharge of board members and the distribution of dividends are also linked to the discussion of financial statements.[14] Upon such a request by the minority, the general assembly meeting is adjourned by the chairperson of the meeting for 1 month without the need for any further vote or decision.
Minority shareholders may also request the postponement of the discussion of financial statements at the second general assembly meeting. However, for such a request to be made, it is a prerequisite that the parties concerned have not responded to the objected points in the financial statements that have been recorded in the minutes, in accordance with the principles of fair accounting.
Special Audit
Pursuant to Article 438 of the TCC, any shareholder may request that the general assembly order a special audit to clarify specific events, even if such matters are not on the agenda, provided that the exercise of shareholder rights necessitates it and the aforementioned right to information or inspection has already been exercised. This right to request a special audit may be exercised by all shareholders. If the general assembly meeting approves the request, the company or any shareholder may, within 30 days, apply to the competent court for the appointment of a special auditor.
However, if the general assembly rejects the request for a special audit, minority shareholders, or shareholders whose aggregate nominal share value amounts to at least one million Turkish Liras, may within 3 months apply to the competent court to request the appointment of a special auditor. In this regard, if the claimant convincingly demonstrates that the founders or the company’s corporate bodies caused harm to the company or the shareholders by breaching the law or the articles of association, the court shall appoint a special auditor.
The appointed special auditor submits a detailed report to the court regarding the findings of the examination, whilst preserving company secrets; the court then serves the report on the company. Thereafter, the court evaluates the company’s request as to whether the disclosure of the report would harm the company’s secrets or other interests worthy of protection, and therefore whether it should not be disclosed to the applicants; it then delivers its decision and serves the report to the company and the minority shareholders who made the request in the manner it deems appropriate. At the conclusion of the relevant process, the board of directors presents the report and related assessments to the shareholders at the next general assembly meeting.
Prevention of Discharge of Liability Arising from Incorporation and Capital Increase
Pursuant to Article 559 of the TCC, the liabilities of founders, directors and auditors arising from the company’s incorporation and capital increase cannot be discharged by way of settlement or release until 4 years have elapsed from the date of registration of the relevant act. Even after the expiry of this period, settlement and release may only become effective with the approval of the general assembly. However, if minority shareholders oppose the approval of this resolution, the settlement and release decision cannot be approved by the general assembly.
Dissolution for Just Cause
Minority shareholders may, pursuant to Article 531 of the TCC, request the competent court to order the dissolution of the company where just cause exists. Just causes may include, taking into account the specific circumstances of the case: the majority or controlling shareholders managing the company in breach of the principle of good faith; the improper use or transfer of company assets; the deprivation of minority shareholders of their dividends for an extended period of time without valid justification; the systematic violation of rights to information, inspection and other shareholder rights.[15] Dissolution of the company must be applied as a measure of last resort, and where possible, the continuation of the company’s operations should remain the primary objective. In this regard, the court may, instead of ordering dissolution, decide to squeeze-out the minority shareholders or to adopt alternative solutions that are appropriate to the circumstances and acceptable to the parties.
Privileges
Privileges may be created by granting certain shares superior rights over others, provided this is regulated by the articles of association. Where an activist shareholder already holds privileged shares, they may utilise these rights to expand their shareholder activism activities.
Foremost among these is the privileged right of representation on the board of directors, as provided for in Article 360 of the TCC. Pursuant to this provision, the privileged right of representation on the board of directors may be granted by the articles of association to specific share groups, to shareholders forming a specific group by virtue of their characteristics and qualities, and to minority shareholders. Shareholders able to exercise this privileged right may access greater information regarding the company’s activities and exercise greater influence through their representatives on the board of directors.[16] In addition, the rights arising from board membership may also be exercised vis-à-vis the board of directors.
Other privileged rights may also be granted to shares. For example, the right to request copies of documents within the scope of shareholders’ rights to information and inspection may be expanded by granting privileged rights to specific shares,[17] or shareholders holding shares with voting privileges may be given a say in certain general assembly resolutions.
Finally, where a general assembly resolution regarding an amendment to the articles of association would violate the rights of shareholders holding privileged shares, such a resolution cannot be implemented unless it is approved at the special committee of privileged shareholders. However, the board of directors may challenge the special committee’s decision to withhold approval by bringing a claim on the grounds that the relevant general assembly resolution does not violate the rights of privileged shareholders.
Rights Arising from the Shareholders’ Agreement
Where a shareholders’ agreement exists among the company’s shareholders, it may be possible to grant various rights to a shareholder in order to preserve the balance of power within the company.[18] In this regard, shareholders’ agreements may regulate, from the perspective of the company’s corporate governance: where, when and how meetings of the board of directors and the general assembly are to be held; the quorum requirements for meetings and decisions; the identification of specific transactions requiring a mandatory resolution; the structure of the board of directors and the organisation of the company’s activities; voting agreements regarding specific resolutions to be taken at the general assembly meeting; shareholders’ rights to information and inspection; put options or tag-along rights enabling exit from the company; and deadlock resolution mechanisms in the event of a corporate deadlock. Consequently, a shareholders’ agreement to which an activist shareholder is a party may be structured from the outset to protect the interests of activist shareholders, or the rights available under the agreement may be exercised within the framework of shareholder activism.
Conclusion
The foregoing has outlined certain rights and tools that shareholders may utilise within the framework of shareholder activism. It must not be forgotten that these rights and tools are interrelated, may trigger one another, or may yield more effective results when used in conjunction. It should also be noted that other rights and tools not discussed in this article may equally be deployed in shareholder activism activities. Each individual case must, however, be examined on its own merits, and the exercise of such rights and tools must be subject to legal evaluation.
The primary benefits of shareholder activism include increasing the company’s market value, improving corporate governance and performance, reducing excessive costs, and ensuring oversight and supervision.[19] However, the concern that shareholder activism carried out with the aim of short-term gain may adversely affect the company’s long-term investments stands out as the most fundamental criticism levelled against shareholder activism.[20]
In this respect, maintaining an appropriate balance among the company’s stakeholders would be beneficial for all parties. Establishing effective communication between activist shareholders and the company’s board of directors and controlling shareholders, listening to constructive criticism and suggestions, objectively evaluating the measures requested, and taking into account both the company’s short-term and long-term strategies will not only ensure the success of shareholder activism but also increase the value it adds for all of the company’s stakeholders.
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[1] Semih Sırrı Özdemir, Halka Açık Anonim Şirketlerde Pay Sahibi Eylemciliği (Aktivizmi), Yetkin Yayınları, 2023 (“Özdemir”), pp. 1, 12-16; Cansu Cindoruk, “Kurumsal Yatırımcıların Pay Sahibi Aktivizmi: Hedef Şirketlere Yönelik Fayda ve Sakıncalar”, Sakarya Üniversitesi Hukuk Fakültesi Dergisi, Vol. 13, No. 1, 2025 (“Cindoruk”), pp. 332-333; Ekrem Solak, “Birleşik Krallık ve Avrupa Birliği Hukukları Kapsamında Pay Sahibi Aktivizmi Düzenlemeleri”, Yeditepe Üniversitesi Hukuk Fakültesi Dergisi, Vol. 16, No. 2, 2019 (“Solak”), pp. 130-132, 135; Beyza Nur Bilen, Minority Shareholder Activism in Turkey, Unpublished Master’s Thesis, 2023 (“Bilen”), pp. 28-31, 64-65; Emre Ergin ve İlkay Ejder Erturan, “Shareholder Activism: Telecommunication Industry In Turkey”, Marmara Üniversitesi İktisadi ve İdari Bilimler Dergisi, Vol. 39, No. 1, 2017 (“Ergin / Erturan”), p. 105; Yavuz Selim Günay, Hukuki Yönleriyle Girişimciliğin Finansmanı ve Girişim Sermayesi (Venture Capital), On İki Levha Yayıncılık, 2024 (“Günay”), p. 381, fn. [1426].
[2] Özdemir, pp. 1, 12-16, 31 et seq; Cindoruk, pp. 332-337; Solak, pp. 130-135; Bilen, pp. 28-40; Ergin / Erturan, p. 104; Günay, p. 381, fn. [1426]; Çiğdem Yatağan Özkan, “Anonim Şirketlerde Pay Sahibi Anlayışındaki Değişimler ve Kısa Vadecilik Akımına Bir Çözüm Önerisi Olarak Sadakat Payları”, Banka ve Ticaret Hukuku Dergisi, Vol. 32, No. 3, 2016 (“Yatağan Özkan”), p. 180.
[3] Özdemir, pp. 31-32, 112 et seq; Cindoruk, pp. 335-336; Solak, p. 133; Bilen, pp. 36-39, 44; Ergin / Erturan, p. 108.
[4] Özdemir, p. 1.
[5] Özdemir, pp. 92, 229-230; Cindoruk, p. 339.
[6] Özdemir, pp. 7-8, 249; Bilen, p. 64; Ergin / Erturan, pp. 107, 114.
[7] Özdemir, pp. 22, 132 et seq; Solak, pp. 132, 135; Cindoruk, pp. 332, 339; Bilen, p. 32.
[8] Günay, pp. 380-381; Abdurrahman Kayıklık, “Anonim Şirkette Azınlığın Korunması: Kim İçin, Neden ve Nasıl Bir Koruma?”, İstanbul Hukuk Mecmuası, Vol. 80, No. 2, 2022 (“Kayıklık”), p. 430.
[9] Ersin Çamoğlu (Reha Poroy ve Ünal Tekinalp), Ortaklıklar Hukuku I, 14th ed., Vedat Kitapçılık, 2019 (“Çamoğlu (Poroy / Tekinalp), Ortaklıklar I”), p. 608; Hasan Pulaşlı, Şirketler Hukuku Şerhi, Vol. II, 5th ed., Ankara, 2025 (“Pulaşlı”), pp. 1170-1173
[10] Çamoğlu (Poroy / Tekinalp), Ortaklıklar I, p. 608; Pulaşlı, pp. 1177-1179.
[11] Çamoğlu (Poroy / Tekinalp), Ortaklıklar I, p. 594; Pulaşlı, pp. 1072-1074.
[12] Özdemir, pp. 57-60.
[13] Pulaşlı, p. 1013.
[14] Çamoğlu (Poroy / Tekinalp), Ortaklıklar I, p. 571.
[15] Ünal Tekinalp (Reha Poroy ve Ersin Çamoğlu), Ortaklıklar Hukuku II, 14th ed., Vedat Kitapçılık, 2019 (“Tekinalp (Poroy / Çamoğlu), Ortaklıklar II”), pp. 352 et seq; Kayıklık, p. 437.
[16] Kayıklık, p. 440.
[17] Tekinalp (Poroy / Çamoğlu), Ortaklıklar II, p. 57.
[18] Gül Okutan Nilsson, Anonim Ortaklıklarda Paysahipleri Sözleşmeleri, Çağa Hukuk Vakfı Yayınları, 2004, p. 77.
[19] Özdemir, p. 173; Cindoruk, pp. 340-342; Ergin / Erturan, p. 114; Serkan Ünal, “Serbest Yatırım Fonlarının Aktivist İşlemlerin Hisse Fiyat Performanslarının Analizi”, Finansal Araştırmalar ve Çalışmalar Dergisi, Vol. 12, No. 23, 2020, pp. 672, 690.
[20] Özdemir, p. 55; Cindoruk, pp. 342-344; Solak, p. 133; Yatağan Özkan, p. 180; Bilen, p. 37; Ergin / Erturan, pp. 103, 106. For detailed explanations on short-termism, see Yatağan Özkan, pp. 157 et seq.
