PARTNERS' PARTICIPATION RIGHTS IN A LIMITED LIABILITY COMPANY 26 April 2024
Participation rights allow partners to have a say in the management of the company or in company affairs.
In limited partnerships, some rights of the partners are inalienable and cannot be waived or eliminated; some rights are vested rights, the amendment of which requires unanimity. The right to participate in the general assembly, the right to vote, the right to dissolve the partnership and withdraw from the partnership for just cause, the right to sue for the annulment or cancellation of general assembly resolutions, and the right to request information and inspect are some of the most commonly exercised inalienable rights.
• Right to Participate in the General Assembly
The right to participate in the general assembly is one of the inalienable rights of limited company partners. All partners registered in the shareholder register can participate in the general assembly. Therefore, each partner has the right to participate in the general assembly and to make proposals, and this right cannot be eliminated by the articles of association or decisions of the partnership organs, nor can a partner waive it.
• Voting Right
The most important partnership right to be exercised in the general assembly is the voting right. Partners exercise their right to choose and make decisions through their voting rights, contributing to the formation of the partnership's will. The voting right is also one of the inalienable rights of a partner. This regulation is found in Article 618 of the Turkish Commercial Code (“TCC”). Unless otherwise provided in the articles of association, each partner's voting right is calculated according to the nominal value of their share in the capital, and unless otherwise stipulated in the articles of association, every 25TL provides one voting right. The law allows for the limitation or privilege of voting rights in the company agreement. Unlike joint-stock companies, privileges in voting rights can be established by differentiating the nominal values of shares. However, in the selection of auditors, the management of the company, or the selection of a special auditor for the inspection of some parts of its management, and in decisions regarding the filing of a liability lawsuit, privileges in votes are not allowed, and the principle of equal voting applies.
• Right to Sue for the Annulment or Cancellation of General Assembly Resolutions
According to Article 622 of the TCC, every partner in a limited partnership can sue for the annulment or cancellation of general assembly resolutions. It should also be noted that; provisions related to joint-stock companies are applied by analogy to the resolutions of the general assembly of limited companies.
• Right to Withdraw
In the presence of just cause, any partner can request from the court to be allowed to withdraw from the company. This right cannot be eliminated in any way. On the other hand, this right can be granted to partners through the partnership agreement, and its exercise can also be subject to certain conditions.
• Right to Request Dissolution of the Company for Just Cause by Lawsuit
According to Article 636/3 of the TCC, a partner has the right to sue for the dissolution of the company in the presence of just cause. However, the court may decide to pay the real value of the plaintiff partner's share and to remove the plaintiff partner from the company or to find a different solution suitable for the situation instead of the claim, due to the severe consequences of the dissolution. At this point, it is observed that the judiciary is granted a wide right of intervention for the benefit of the company.
• Right to Information and Inspection
The legislator has granted partners the right to information and inspection in Article 614 of the TCC. Accordingly, every partner has the right to request information from the managers about the management of the company, to inspect the business, and accounts, considering everything directly related to the partnership as the business of the partnership. Managers are obliged to fulfill the partners' requests in this direction without delay. In terms of the right of inspection, partners are regulated to be able to inspect certain subjects. From this perspective, partners do not have a general right of inspection.
According to Article 614/3 of the TCC, if there is a risk that the information obtained by a partner could be used to the detriment of the company, managers can prevent the obtaining of information and the inspection to the necessary extent.
• Minority Rights
These are the rights available to minority shareholders owning %10 of the principal capital. For example, pursuant to Article 617/3 of the TCC, referring to the provisions related to the minority in joint-stock companies, shareholders representing at least one-tenth of the capital can request in writing the calling of the general assembly to a meeting by specifying the reason and the agenda. In addition, adding items to the meeting agenda and requesting the postponement of the discussion of the balance sheets are also included in minority rights.
