If an acquirer does not obtain full control of a target company, what rights do minority shareholders enjoy?
Mergers & Acquisitions
If a MTO is not triggered as result of an acquisition of a significant stake then the minority shareholders do not enjoy any particular rights other than those granted by law such rights to receive dividends, right to vote right to oversee the management of the Company.
A dissenting shareholder who receives a notice has the ability to apply to court for relief within one month after receipt of the notice by the purchaser to compulsorily acquire his shares. The right of a dissenting shareholder who has received a notice from the purchaser to compulsorily acquire his shares under Section 102 of the Companies Act is not limited to having the value of his shares appraised. The statutory language gives the court a broad discretion to order as it thinks fit in the context of an application made by a dissenting shareholder who has received a notice pursuant to a section 102 compulsory acquisition.
The principal argument of any dissenting shareholder requesting that the court vitiate the notice of compulsory acquisition would be that, in some way, he is being oppressed in his capacity as a minority shareholder. Such oppression would usually turn on the price being offered for the shares because the court will look to shareholders as a whole and not simply the loss of control or dilution in respect of an individual shareholder. The onus is on the dissenting shareholder to convince the court that a compulsory acquisition would be unfair. The test probes whether the offer is fair to the shareholders as a body. The dissenter must convince the court that the judgment of those who have accepted the offer was somehow at fault. This is difficult to maintain where more than 90% in value of the shares of the company have accepted the purchaser’s offer to purchase their shares.
British Virgin Islands
Minority shareholders have limited rights in the British Virgin Islands which primarily relate to; (i) information rights; (ii) the right to bring legal action – personal, representative and derivative action; and (iii) just and equitable winding up.
Under the Act, a Shareholder of a target company may apply to the court if it considers that the affairs of the company have been, are being or are likely to be, conducted in a manner which is, or any act or acts of the company have been, or are likely to be, oppressive, unfairly discriminatory or unfairly prejudicial to the shareholder in its capacity as a shareholder.
If the court agrees with the shareholder, and considers it to be just and equitable that an order be made in relation to the particular conduct, it may make any order that it thinks fit, including an order requiring the company or any other person to acquire the shareholder’s shares or to pay compensation to the shareholder; regulating the future conduct of the company’s affairs; amending the memorandum or articles of the company; appointing a receiver or liquidator of the company; directing the rectification of the records of the company; and/or setting aside any decision made or action taken by the company or its directors in breach of the Act or the company’s memorandum or articles.
A derivative action refers to an action initiated by a shareholder to enforce a wrong done to the company, the action being taken in the company’s name rather than the shareholder’s name. Accordingly, the shareholder obtains no direct benefit if judgment is given in the company’s favour.
A derivative action is typically used where no action would otherwise be taken by the company because the wrongdoers are also the company’s decision-makers. A minority shareholder may need to resort to a derivative action if, for example, directors of the company have breached their fiduciary duties to the company, if the directors are also the majority shareholders and can control the vote at a general meeting, or because the directors may be able to prevent (or at least delay) a general meeting being convened to vote on whether the company should sue the directors.
If the shareholder can bring himself within one of the exceptions to the rule in Foss v Harbottle, he may be able to bring a derivative action, whereby he may bring an action in his own name but on behalf of the company (for example, where the alleged act is beyond the capacity of the company or illegal (i.e. ultra vires), constitutes a “fraud on the minority” or infringes the personal rights of an individual shareholder).
Winding Up on Just and Equitable Grounds
Under section 162 of the Insolvency Act 2003 (Insolvency Act), one of the grounds upon which the court can appoint a liquidator to wind up a company is that “the Court is of the opinion that it is just and equitable that a liquidator should be appointed”.
The Insolvency Act provides that the court must not appoint a liquidator on the basis of just and equitable grounds if it is of the opinion that some other remedy is available to the applicant, and the applicant is acting unreasonably in seeking to have a liquidator appointed instead of pursuing that other remedy. With the unfair prejudice remedy and derivative action available to shareholders, the winding up order can be considered as a last resort.
Minority shareholders have very limited rights in the Cayman Islands. Minority rights primarily relate to (i) information rights, (ii) the right to bring legal action – personal, representative and derivative action, and (iii) just and equitable winding up.
Unless specifically stated in the constitutional documents or agreed by contract, a minority shareholder of a company has no right, by virtue of his position as shareholder, to be provided with information regarding the company (including the company’s accounts). However: (i) on the application of the holders of not less than one-fifth of a company’s shares, the court may appoint inspectors to examine the company’s affairs and prepare a report thereon to the court; and (ii) the court also has discretion to order pre-action discovery of information by an intended defendant but only if this is required to facilitate the precise formulation of the claim. If a shareholder has a potential claim against the company’s directors, he may be able to use this rule to obtain information.
A shareholder in a company may be able to bring an action against the company if he can show that a duty owed to him personally (rather than to the company) has been breached. For example, if a shareholder is prevented from exercising a contractual right embedded in the company’s constitutional documents, they would generally bring a personal action against the company for a declaration/injunction.
It is possible for an individual shareholder to bring an action on behalf of himself and their fellow shareholders. This type of action would be appropriate if there is a common interest or right which the representative shareholder seeks to enforce on behalf of all the shareholders. Apart from in certain limited circumstances, a judgment will bind all of the parties named in the proceedings.
It is possible for shareholders to enforce a right belonging to the company rather than to any individual shareholder or shareholders (such as a breach by a director of their fiduciary duties). Since the right belongs to the company, the litigation has to be brought by the company itself. Normally, a company’s constitutional documents will state that the right to commence litigation will lie with the Board. As such, the shareholders will need to persuade the directors to bring an action on behalf of the company.
If the directors decline to take action, the shareholders will want to consider whether they can replace the directors with a newly constituted Board, who can then initiate the action against the former directors. Alternatively, it is also possible for the shareholders (by ordinary resolution) to bring litigation in the name of the company, at least where the directors are alleged to be a party to the wrongdoing.
Also, if the shareholder can bring himself within one of the exceptions to the rule in Foss v Harbottle, he may be able to bring a derivative action, whereby he may bring an action in his own name but on behalf of the company (for example, where the alleged act is beyond the capacity of the company or illegal (i.e. ultra vires), constitutes a ‘fraud on the minority’ or infringes the personal rights of an individual shareholder).
Just and Equitable Winding Up
A last resort for a shareholder who has been unfairly treated is to petition the court to wind up the company on the basis that it is ‘just and equitable’ to do so. If a winding up order is made, liquidators will be appointed who can then investigate the company’s affairs and pursue claims against the former directors (and any others who have caused loss to the company).
A shareholder bringing a petition on this ground will have to show that he has a ‘tangible interest’ in the winding up (i.e. that there is likely to be a surplus of assets available for distribution to shareholders). If the company is hopelessly insolvent and there is no prospect of a return to shareholders, a shareholder will not have standing to issue a petition on this ground (and if such a petition is issued it is liable to be struck out).
If an acquirer does not obtain full control of a target company, according to Company Law (revision in 2013), minority shareholders are still entitled to enjoy the capital proceeds, participate in making important decisions, and choose managers, etc. Furthermore, they still enjoy the right of reviewing the company’s bylaw, the minutes of the shareholders’ meeting, the financial reports and other company’s documents stipulated by laws.
Minority shareholders have several rights deriving from the Limited Liability Companies Act that depend on their ownership percentage in the company. For example, a shareholder with any ownership in the company can make counter-proposals at a general meeting of shareholders or block certain decisions that require individual shareholder consent. A holder of 10% of all shares in the company may require a special audit, an extraordinary general meeting of shareholders to be convened, or a minimum dividend to be distributed (such dividend being equal to at least 50% of the net profit of the financial period subject to availability of distributable reserves; however not in excess of 8% of the total equity).
Minority shareholders can make use of their standard rights arising out of the ownership of the share, such as the participation right in the general meeting, voting rights (not for shareholders of preference shares), information rights, dividend rights etc. Minority shareholders may vote for auditing of management measures in the shareholders’ meeting. Minority shareholders with 10% of the voting rights in a stock corporation may adopt a resolution of the shareholders’ meeting according to which a special representative is appointed to exercise damaged claims against the board of directors for a violation of their duties.
Law 2190/1920 on Greek companies limited by shares provides for the minimum rights of minority shareholders. Article 39 lists a number of privileges, most noteworthy of which on this instance refer to:
• The ability of the shareholders representing the 1/20 of the paid-up share capital to include in the agenda of an already convoked General Shareholder Meeting any additional subject, so long as it was communicated to the BoD at least 15 days before the General Shareholder Meeting.
• The ability of any shareholder to request the disclosure of information regarding company matters, to the extent that the latter are useful for the assessment of the subjects on the agenda.
• The ability of the shareholders representing the 1/5 of the paid-up share capital to request and receive information by the Board of Directors during the General Shareholder Meeting information about the course of the company matters and the financial situation of the company.
• The ability of the shareholders representing the 1/20 of the paid-up share capital to request that the decision on any given matter during the General Shareholder Meeting be taken by roll-call vote.
However, the rights of minority shareholders may be increased or enhanced by inserting special provisions in the articles of association of each company which can be amended pursuant to a respective General Shareholder Meeting decision, to the extent that such amendment does not contravene mandatory provisions of Law 2190/1920.
Where an acquirer has exercised the squeeze out rights provided under the Guernsey Companies Law (see question 26 below), a shareholder who has not assented to the acquisition may within 1 month after the date of the acquirer’s notice to acquire, apply to the Royal Court of Guernsey to cancel that notice. The Court may cancel the notice or make such order as it thinks fit.
A shareholder may apply to the Guernsey Court for relief on the ground that –
- the affairs of the company are being or have been conducted in a manner that is unfairly prejudicial to the interests of members generally or of some part of its members (including at least himself), or
- an actual or proposed act or omission of the company is or would be so prejudicial.
The target’s constitutional documents may provide additional rights for its minority shareholders.
Isle of Man
Directors must call a meeting of the Company if requested in writing to do so by a shareholder or shareholders holding at least 10% (or such smaller percentage as may be specified in the constitutional documents) of the voting rights in relation thereto.
A shareholder of a 1931 Act company may apply to the Court for an order if the affairs of the company are being conducted or that the powers of the directors of the company are being exercised in a manner oppressive to him or some part of the members (including himself), or in disregard of his or their proper interests as shareholder(s).
A shareholder of a 2006 Act company who considers that the affairs of the company have been, are being or are likely to be, conducted in a manner that is, or have been, or are, likely to be oppressive or unfairly prejudicial to such member in that capacity, may apply to the Court for an order.
The target’s constitutional documents may provide additional rights for its minority shareholders.
If the acquirer obtains at least 90% in value of the target’s shares and gives notice for the acquisition of share from a dissenting shareholder, the dissenting shareholder may, within one month from the date on which the notice was given, make an application to the Court for an order.
Shareholders have certain statutory minority protections through a detailed set of rules set out in the LLCA and the PLLCA. Such rights comprises inter alia a right to attend and speak at general meetings, certain disclosure rights, rights to bring legal actions to void a corporate resolution on the basis of it being unlawfully adopted or otherwise in conflict with statute or the company’s articles, etc. Some of these rights are granted to each individual shareholder irrespective of voting rights, and the LLCA and PLLCA provides specific rights to minority shareholders representing a certain percentage of the share capital and/or votes.
Several corporate resolutions require consent from the general meeting by a qualified vote. Increase or decrease of the share capital of a company must be resolved by at least two thirds of the aggregate share capital represented at the general meeting as well as two thirds of the aggregate casted votes. The same qualified vote is required for decisions on mergers and de-mergers as well as dissolution of the company. Consequently, minority shareholder representing 33.34% of the share capital and votes in the target will have a "veto right" in numerous situations.
Moreover, decisions that entails that the shareholders' right to dividend or the company's assets are reduced, requires a vote from 90% of the aggregate share capital represented at a general meeting as well as two thirds of the aggregate votes cast. For companies that do not have applicable provisions on company approval for transfer of shares or pre-emption rights for existing shareholders, the resolution on such procedures is subject to the same qualified vote. Some decisions even require the support of all holders of issued shares.
In addition to the rules on qualified votes, the companies' legislation set out various provisions that, both directly and indirectly, protects the rights of the minority of the shareholders of a company. For example, any shareholder has the right to propose an investigation of a company's incorporation or management as well as specific matters related to the management or accounts. If such proposal is resolved by at least 10% of the shareholders, any shareholder may petition the court to have an investigation initiated. Further, shareholders who hold at least 10% of the share capital may petition the court to determine a higher amount of dividend than resolved by the general meeting.
Note that a majority shareholder cannot exercise its powers in a Norwegian company at board or management level, in a manner that is likely to cause unjust enrichment to a shareholder or a third party at the cost of the company or another shareholder – see question 9.
Finally, provided the conditions for a squeeze-out are met (see question 26), it will be a straightforward process to have a listed target delisted from Oslo Stock Exchange. However, if these conditions are not met, this could be substantially more challenging.
In addition to the above opportunities to sell their shares to the buyer, minority shareholders have some general rights that are designed to protect their interests in the company. Among these are certain matters reserved to general meetings of shareholders that require at least 3/4 of votes to pass a decision, minority shareholders’ right to nominate candidates to board of directors (if they hold at least 2% of voting shares). In certain cases minority shareholders are entitled to file court claims against the company itself to overturn decisions by the general meeting or the board of directors.
In limited liability companies, minority participants generally have broader veto rights, being able to block any resolution on reorganisation or liquidation of the company, acceptance of new members, capitalisation of shareholders’ loans (which resolutions require unanimous consent). Amendments to a charter require 2/3 majority voting.
Please note that additional voting requirements (and, accordingly, veto rights) in non-public companies may be set forth by a company’s charter.
There are generally few rights which are reserved specifically for minority shareholders; their rights are typically no greater than those of other shareholders, and are generally limited to rights to vote and to receive dividends and certain financial information about the company. In an LLC, amendments to the constitution, changes of ownership or capital increases will require shareholder votes and can be vetoed by any shareholder, regardless of whether they hold a majority or minority stake in the company.
In a JSC, shareholders representing at least 5% of the share capital may:
- require the board to convene a general assembly meeting; and
- request the competent judicial authority to inspect the company, where there is good reason to believe that actions of the board or the auditors in respect of the affairs of the company, are suspicious.
The NCL also introduced cumulative voting for shareholders of a JSC in relation to the appointment of a board. This allows shareholders to cast all of their votes to a single nominee for the board, rather than having to divide the total value of their votes amongst different candidates for board membership. As a result, depending on how majority shareholders allocate their votes, minority shareholders may be able to appoint their own board members, thereby improving their representation.
Minority shareholders cannot force through squeeze outs, which are not permitted under Saudi law.
In the case of a share transfer, if a buyer acquires most but not all of the shares of the target company and the remaining minority shareholders are not squeezed-out, in principal an appraisal right is not given to such remaining minority shareholders who object to the change of a majority shareholders under the Companies Act, unlike a merger and other organizational restructuring. The remaining shareholder who wants to make an exit from the company can (i) simply sell their shares to a third party (on or off-market), or (ii) (in the case of shares with a restriction on transfer and the company rejects the proposed transfer to a third party) demand the company purchase the shares at a price agreed between the company and that remaining shareholder (if the parties cannot reach an agreement on the purchase price, the court will determine a price upon request by any of the parties).
Under the general law, the only right of minority shareholders is to inspect the books and records of the target company unless special rights are included in the target company’s articles of association, as well as the right to take action against directors if the directors cause damages to the company and the company fails to take action against the directors.
Public Company (shareholder holding less than 25%)
- Request board of directors of the target company to call a shareholder meeting (20%).
- Institute proceedings against directors before the court (if the target company refuses to do so) for breach of fiduciary duties, the articles of association, shareholders resolutions or applicable law (5%). Given the new class rights legislation which came into force at the end of last year, shareholders can easily gather and take legal action against the directors before the court.
- File a motion before the court for cancellation of resolutions adopted at a shareholders meeting convened or passed in violation of the articles of association or applicable law (20%).
- Submit a written application to the MoC, requesting the appointment of an inspector, to inspect the business operations and financial conditions of the target company as well as the conduct of business by the board of directors of the target company (20%).
Publicly Listed Company (shareholder holding less than 25%)
- Block issuance of shares at below market price (10%).
- Block a delisting resolution (10%).
- Propose matters for consideration at the annual general meeting (AGM) or an extraordinary general meeting (EGM) (5%).
Public Company (shareholder holding more than 25% but below 50%)
The following transactions require the vote of shareholders holding at least ¾ of the shares with voting rights attending a shareholders meeting. Thus, if a shareholder holds more than 25%, it can veto such a transaction.
- An increase or decrease of registered capital.
- A sale or transfer of the whole or substantial parts of the business of the target company to other persons.
- A purchase or an acceptance of transfer of the business of others by the target company.
- An entry into, amendment or termination of a contract concerning the lease of the whole or substantial parts of the business of the target company, transfer of the management of the business of the target company to others, or a consolidation of the business with others for the purpose of profit and loss sharing.
- An amendment of the memorandum of association or articles of association.
- An issuance of debentures.
- An amalgamation.
- A dissolution.
Publicly Listed Company (shareholder holding more than 25% but below 50%)
- An issuance and offer for sale of securities to directors and employees of the target company (ESOP).
- A “whitewash” approval.
- Class transaction.
- Connected party transaction.
Under Austrian corporate law both the Limited Liability Companies Act as well as the Joint Stock Corporations Act provide for minority rights, the extent of which depends on ownership thresholds.
Regarding limited liability companies, shareholders holding for example a minority of at least 10% of the shares are entitled to call a meeting of the general assembly or to put a certain matter on the agenda of the general assembly. Also, shareholders – alone or jointly – representing at least one-third of the share capital are entitled to designate a minority representative in the supervisory board. In addition, the Limited Liability Companies Act determines certain matters that require at least a 75% majority decision, which is why shareholders holding shares of more than 25% have a so-called blocking minority (e.g., regarding the amendment of the articles of association).
As to joint stock corporations, a minority shareholder or a group of shareholders holding for example at least 5% of the share capital may request the calling of a shareholders’ meeting or request that a certain matter be put on the agenda of a shareholders’ meeting. As a further example, a minority of at least 10% of the share capital may request the dismissal of a member of the supervisory board by court decision for cause. As with limited liability companies, 25% plus one vote of the share capital constitutes a blocking minority for certain matters requiring a 75% majority decision.
In the context of a bid made to all holders of a target company’s securities for all the company’s securities, remaining minority shareholders are granted the right to require the offeror to buy their securities at a fair price which shall take the same form as the consideration offered in the bid, or alternatively in cash. An independent expert must be appointed to certify that the price offered, which must equivalent be to or more than an equitable price, is fair and reasonable.
Minority shareholders continue to have full rights as shareholders in the company, including voting rights. If the company remains listed after the buyer’s acquisition of a majority stake, the controlled company will be subject to ongoing reporting obligations, although it may be able to opt out of some governance requirements imposed by the stock exchanges. Moreover, as outlined in Question 9, where a company has a controlling shareholder, that controlling shareholder owes the corporation’s minority shareholders a duty of loyalty.
Minority shareholders or members always have the rights to:
- receive notice of and briefing materials in relation to any meetings of the General Meeting of Shareholders or Members’ Council of the target company;
- attend meetings of the General Meeting of Shareholders or Members’ Council and cast votes;
- gain access to the minute book of the General Meeting of Shareholders or Member’s Council in order to inspect the same; and
- participate on a pro rata basis in any issuances of new shares of the same class or increases in the registered charter capital of the target company.
In the context of JSCs, any shareholder or group of shareholders holding 10% or more of the issued voting share capital for a period of at least six consecutive months is entitled to:
- nominate candidates for election to the Board of Management or Inspection Committee;
- obtain access to and take extracts from the minute book of the Board of Management, the annual and mid-year financial reports of the target company, or the reports of the Inspection Committee;
- request the convening of extraordinary meetings of the General Meeting of Shareholders in certain circumstances; or
- request the Inspection Committee to investigate specific matters relating to the management or operation of the target company.
Specific minority shareholder protections may of course be provided for in the charter of any target company.
Generally any prejudiced shareholder can may apply to the Supreme Court for an order under section 169 or section 178 of the Companies Act 2001 on the basis that he considers the affairs of the company have been, or are being, or are, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him. Additionally minority shareholders may require a company or a third party arranged by the company to purchase their shares if such minority shareholders have voted against a resolution that has been approved by the majority shareholders. The dissenting shareholder of a listed GBC or a Reporting Issuer must do so within 28 days form the day which he was informed of the offeror’s acquisition of 90% or more of the voting shares of the target company.
Where a bidder, has by virtue of the acceptance of an offer, acquired or contracted to acquire not less than 90 per cent in nominal value of all of the shares (or all of the shares of a particular class) of the Jersey company, the holder of any shares (or class of shares) to which the offer relates who has not accepted the offer may, by written notice to the bidder require the bidder to acquire the holder’s shares.
In addition to the withdrawal right mentioned above for listed companies, the minority shareholders of both closed and listed companies enjoy the following rights:
- If they hold more than 5% of the share capital of the target, to convene the general meeting of shareholders and to add new points of discussion on the agenda of a general meeting;
- to request additional reports and information concerning the company;
- to file on behalf of the company a liability court application against directors, officers or members of the executive board and the supervisory board and the censors or auditors.
Pursuant to the law, all shareholders must exercise their rights in good faith, respecting the legitimate rights and interests of the company and other shareholders. Based on this provision, minority shareholders are well protected against a potential abuse made by the majority shareholder.
Other than minority buyout rights where the acquirer holds more than 90% (refer para 26 below), a minority shareholder has the usual shareholder rights that apply under the Companies Act and (if the company is listed) the Listing Rules.
Minority shareholders in a company enjoy a range of protections, both at common law and under the Companies Act. The protections under the Companies Act are designed to provide minority shareholders with certain procedural safeguards in respect of the conduct of the company's business and also a degree of protection against conduct by the company which is prejudicial to the interests of the shareholder (as a shareholder rather than in any other capacity).
A minority shareholder may petition the courts for relief where it believes that it has been unfairly prejudiced, but such petitions are rarely brought or granted in practice in the context of public mergers, as the courts will generally take the view (unless the terms of the offer are manifestly unfair or there has been some improper conduct), that a fair offer has already been made to purchase the shares of the relevant shareholder (being the primary defence available to a majority shareholder defending such a claim).
A key consideration for minority shareholders is whether the bidder has been able to acquire in excess of 75% of the voting rights in the target. Under these circumstances, the bidder will be able to delist the target and re-register it as a private company. As many institutional investors will be restricted in their ability to own illiquid or unlisted stock, it is often the case that once a bidder has acquired or contracted to acquire in excess of 75% of the voting rights in the target and where it has expressed an intention to delist the target, the majority of the target's remaining institutional shareholders will look to sell their shares in any event.
In case a shareholder may not have full control of the Company, the Spanish Companies Act (Ley de Sociedades de Capital) sets forth different majority regimes for certain resolutions. In this regard, minority shareholders, which are at the same holders of the following stakes, shall be entitled to enforce the following rights (among others) in Private Companies and Private Limited Companies:
- Request for the appointment of an expert for the valuation of assets: a stake amounting to 5% of the share capital in and Private Companies (Sociedad Anónima). 3% shall be required for listed companies, while is not possible to exercise such right in Private Limited Companies (Sociedad Limitada);
- Enforcement of the liability action against the company’s directors as consequence of non-monetary contributions: a stake amounting to 5% of the share capital in Private Limited Companies (Sociedad Limitada) and is not possible to use such right in Private Companies (Sociedad Anónima) and listed companies;
- Request for the covenants of the shareholders meeting: a stake amounting to 5% of the share capital both in Private Limited Companies (Sociedad Limitada) and Private Companies (Sociedad Anónima). 3% shall be required for listed companies;
- Information right without rejection of the request (i.e. the company must be obligated to deliver such information in those cases in which the require stake is reached): a stake amounting to 25% of the share capital in Private Limited Companies (Sociedad Limitada) and in Private Companies (Sociedad Anónima). Nevertheless, with regards to Private Companies (Sociedad Anónima), such percentage may be reduced down to a minimum percentage of 5%. With regards to listed companies, 25% of stake share capital shall be required for the exercise of such information right, which could be reduced down to a minimum percentage of 3%.
- Request for the call of the company’s shareholders meeting: a stake amounting to 5% of the share capital in Private Limited Companies (Sociedad Limitada) and in Private Companies (Sociedad Anónima);
- Request for amend the call (to include additional points of the agenda) of the company´s shareholders meeting: a stake amounting to 5% of the Private Companies (Sociedad Anónima) and 3% of the listed companies (in this case, only for amending the agenda of ordinary general shareholders meetings, which are mandatory by law, and not extraordinary shareholders meetings).
- Request for the attendance of a public notary to the shareholders meeting: a stake amounting to 5% of the share capital in Private Limited Companies (Sociedad Limitada) and 1% in Private Companies (Sociedad Anónima). 1% shall be required for listed companies;
- Enforcement of the corporate liability action against the directors of the company: a stake amounting to 5% of the share capital both in Private Limited Companies (Sociedad Limitada) and in Private Companies (Sociedad Anónima). 3% shall be required for listed companies;
- Right to appoint members of the board of directors by means of the proportional representation system: In Private Companies (Sociedad Anónima), the percentage required will depend on the result of dividing the share capital amount into the number of members of the board of directors. Such shall be applicable to listed companies but not to Private Limited Companies (Sociedad Limitada);
- Request for the appointment of auditors: a stake amounting to 5% of the share capital both in Private Companies and Private Limited Companies Private Limited Companies (Sociedad Limitada) and 1% in Private Companies (Sociedad Anónima). Such minority shareholders right will not be applicable for listed companies as they must submit their financial statements to a statutory auditor in all cases.
Turkish Commercial Code mainly provides the following rights (under certain conditions) to the minority shareholders:
- certain share groups or the minority may have the right to be represented at the board of directors (if foreseen in the articles of association);
- shareholders holding 10% of the share capital in private companies and 5% in listed companies have the right to (a) convene the general assembly of shareholders to a meeting and (b) request the addition of new discussion items to the agenda of the general assembly meeting, (c) postpone for one month the discussion on financial statements at the general assembly, (d) request from the court the dissolution of the company based on valid grounds;
- any shareholder may request the appointment of a special auditor for specific matters.