Appraisal Right in Public Joint Stock Companies

Abstract

This study reviews Turkish appraisal right, which was recognized for shareholders of publicly held joint stock companies in Turkey by the Capital Markets Law No. 6362 dated 6.12.2012 ("CML"). According to the law, dissenting shareholders can leave a company by selling their shares to the company. The shareholders are required to have attended a general meeting of material transactions as set forth in Article 23 of CML or in the Communique on Common Provisions on Material Transactions and Appraisal Rights (II-23.1). The transactions must be accepted as material by the Capital Markets Board and must be drafted by the opposition in the minutes of the meeting. Under Paragraph 2 of Article 24 of CML, there are additional guidelines in the event that: a shareholder is prevented from attending the general meeting unlawfully; the shareholder is not duly invited to the general meeting; or the agenda of the general meeting is not announced in due course. In such instances, the shareholders can exercise their appraisal rights without attending the meeting or drafting their opposition in the minutes of the meeting. Following an appraisal, the company is obligated to purchase the shares above the average price in the exchange market. For companies with shares not traded in the open market, the price will be determined as fair value by a valuation report. In this study, we review the concept, aim and history of appraisal right. As a condition precedent, we examine the conditions and material transactions that have given rise to the use of appraisal right. We also examine appraisal values and sanctions, which may be imposed due to inconsistencies with the new CML legislation.