INTRODUCTION
The right to request a special audit in joint stock companies is an important legal mechanism based on the need for shareholders to demand greater transparency over company management and operations. This right plays a critical role in enabling small shareholders to exercise effective control over company management, especially in cases where the right to obtain and review information is insufficient. Article 438 and following articles of the Turkish Commercial Code No. 6102 (“TCC”) allow shareholders to request, under certain conditions, that the company’s activities be examined by an independent expert. Thus, independent and impartial examinations conducted outside the internal audit systems of joint stock companies can detect unlawful activities or activities that are detrimental to the interests of the company and increase the pressure of accountability on the company management.
A. REQUEST FOR SPECIAL AUDIT BY SHAREHOLDERS OF A JOINT STOCK COMPANY PURSUANT TO TCC
Pursuant to Article 438 of the TCC, each shareholder may request the general assembly to clarify certain events through a special audit, even if it is not included in the agenda, where it is necessary for the exercise of shareholding rights provided that the right to obtain or review information has been previously exercised. As it is seen, the right to request a special audit from the general assembly by a shareholder is independent of the shareholding rate of the shareholder in the company. On the other hand, this request is subject to two different conditions; (i) being necessary for the exercise of shareholders’ rights and (ii) the right to obtain and review information having been exercised beforehand. In this context, the fact that the shareholder requesting a special audit has exercised its right to obtain and review information pursuant to Article 437 of the TCC, but has not received the requested information, or has received incomplete information, is necessary for the special audit request to be submitted to the general assembly in a legally valid manner. On the other hand, the burden of proof that the special audit is necessary for the exercise of shareholders’ rights is on the requesting shareholder.
The addressee of the shareholder’s special audit request is the general assembly of the company. The shareholder must make its request during the general assembly meeting. The special audit request is an exception to the agenda adherence element, and the shareholder may submit a special audit request at any stage of the general assembly, even if there is not a relevant item on the agenda. Therefore, the rejection of the special audit request by the general assembly on the grounds that there is no item on the agenda is unlawful. As for the voting of the special audit request by the general assembly, no special quorum is stipulated under the TCC, and unless a higher quorum is specified in the articles of association of the company, the meeting quorum shall be met by the presence of the shareholders or their representatives who hold at least one fourth of the capital, and the decision quorum shall be met by the affirmative vote of the majority of the votes present.
If the special audit request is accepted by the general assembly, the company or each shareholder may, within thirty days, request the appointment of a special auditor from the commercial court of first instance where the company’s headquarters is located, pursuant to Article 438/2 of the TCC. As can be seen, at this point, not only the shareholder requesting a special audit, but also all shareholders have the right to apply to the court regardless of their shareholding ratios. Pursuant to the preamble of the aforementioned article, it is stated that the shareholder who has exercised its right to obtain or review information and the shareholder requesting a special audit do not necessarily have to be the same person; however, the subject matter should be the same. The company referred to in the text of the article refers to the board of directors, which is the representative body of the company. Another point is that the court will appoint the special auditor in any case, and the general assembly, which accepts the request, is not authorized to appoint the special auditor.
B. REJECTION OF THE SPECIAL AUDIT REQUEST BY THE GENERAL ASSEMBLY
Another possibility is that the general assembly rejects the shareholder’s request for special audit. In this case, Article 439 of the TCC stipulates that shareholders who meet certain qualifications may request the appointment of a special auditor from the commercial court where the company headquarters is located within three months. These shareholders are; (i) shareholders constituting at least one tenth of the share capital, or one twentieth in public joint stock companies, or (ii) shareholders whose shares have a total nominal value of at least one million Turkish Liras. As can be seen, if the general assembly accepts the special audit request, any shareholder may apply to the court for the appointment of a special auditor, whereas if the general assembly rejects the request, only minority shareholders or shareholders holding a certain nominal value of capital have the right to apply to the court. However, it should not be forgotten that the shareholders who will request a special auditor must have previously exercised their right to obtain and review information pursuant to Article 437 of the TCC. As stated in the preamble of the article, the three-month period in question is a prescription period, and in the event of an application to the court after the expiration of the period, the court may reject the request by ex officio taking into account the prescription period at every stage of the proceedings. The prerequisite for the commencement of the court process for the fulfillment of the special audit request is the submission of the special audit request by the shareholder in the general assembly, and therefore, it will be important for the requesting shareholder to submit the request in writing to the general assembly and to record it in the minutes in order to meet the burden of proof.
In the event that the general assembly rejects the request for special audit, another condition for the court to accept the request is that the petitioners must convincingly demonstrate that the founders or company organs have caused damage to the company or shareholders by violating the law or the articles of association. As can be seen, the shareholders applying to the court must prove the existence of a damage. The court is obliged to hold a hearing when evaluating the request, and a decision should be taken after hearing the company and the shareholders.
C. CONCLUSION
In the event that the shareholders’ right to obtain and review information is insufficient, they may exercise their right to request a special audit, which is another right granted to them under the TCC. For shareholders to submit a special audit request to the general assembly, the right to obtain and review information must first be exhausted. If the general assembly accepts the special audit request, a special auditor shall be appointed by the court upon application to the court by the shareholders or the company. If the general assembly rejects the special audit request, shareholders who meet certain qualifications must apply to the court and prove that the company or the shareholders have suffered damages, and only in this case can the court decide to appoint a special auditor.
