Firm Profile > ASC Law Office > Istanbul, Turkey

ASC Law Office
HARMANCI GIZ PLAZA K: 16
LEVENT
34410 ISTANBUL
Turkey

Restructuring and insolvency Tier 1

ASC Law Office has a strong offering in debt restructuring, advising on the lender and borrower side of refinancings and restructurings. Clients include corporate borrowers and a number of major Turkish bank lenders. The  broad team is led by Okan Beygo, who advises on loan restructurings and refinancings, alongside banking and capital markets specialist Denel Balcı Kırali, and project finance-focused pair Levent Yetkil and Denel Balcı, who focus on oil and gas projects and banking legislation respectively.

Practice head(s):

Okan Beygo; Denel Balcı Kırali; Levent Yetkil; Ela Sarı

Key clients

Akbank

Alternatifbank

Deutsche Bank

European Bank for Reconstruction and Development

T.C. Ziraat Bankası

T. Garanti Bankası

T. İş Bankası

Türkiye Sınai Kalkınma Bankası

Vakıflar Bankası

Yapı ve Kredi Bankası

AG Anadolu Grubu Holding

Akfen Yenilenebilir Enerji

Akfen Holding

Aslancık Elektrik Üretim

Doğan Şirketler Grubu Holding

Doğuş Enerji Yatırımları

Doğuş Holding

Banking, finance and capital markets Tier 2

ASC Law Office has strengths in acquisition finance, and project and infrastructure financing, working on large-scale deals for Turkish sponsors, banks, and international financial institutions. In particular, the team specialises in high-value energy-sector lending, including cross-border syndicated loans and complex debt restructuring. It also handles capital markets work, including IPOs and debt issues. Okan Beygo oversees the overall banking and capital markets practice and handles a broad range of matters; Denel Balcı Kırali and Levent Yetkil focus on project finance; and Ela Sarı has expertise in syndicated lending, restructuring, and regulatory issues.

Practice head(s):

Okan Beygo; Denel Balcı Kırali; Levent Yetkil; Ela Sarı

Testimonials

‘The team is just exceptionally easy to work with, it’s a genuine pleasure – they are friendly, responsive and incredibly dedicated. ’

‘The team has always given guidance promptly.’

‘The team is really trustworthy, hard working, always gets back with the right guidance and able to give information and solve problems within the whole scope of banking business, not just for treasury business. ’

Key clients

Akbank

Alternatifbank

Deutsche Bank

European Bank for Reconstruction and Development

T.C. Ziraat Bankası

T. Garanti Bankası

T. İş Bankası

Türkiye Sınai Kalkınma Bankası

Vakıflar Bankası

Yapı ve Kredi Bankası

GBI

AG Anadolu Grubu Holding

Akfen Yenilenebilir Enerji

Akfen Holding

Aslancık Elektrik Üretim

Borusan Holding

Boyabat Elektrik Üretim

Doğan Şirketler Grubu Holding

Doğuş Enerji Yatırımları

Doğuş Holding

Project finance/projects Tier 2

ASC Law Office is focused on energy and projects work, and has consistent relationships with Turkish banks and financial services clients, as well as acting for sponsors. The team handles financing matters, including credit facilities and restructuring work, as well as procurement transactions related to major projects. The team is jointly led by Okan Beygo, and Ela Sarı, and Denel Balcı Kırali, who both specialise in banking and capital markets transactions, including syndicated lending and debt restructuring mandates, alongside oil and gas specialist Levent Yetkil.

Practice head(s):

Okan Beygo; Denel Balcı Kırali; Levent Yetkil; Ela Sarı

Key clients

T.C. Ziraat Bankası

T. Garanti Bankası

T. İş Bankası

Türkiye Sınai Kalkınma Bankasi

Vakıflar Bankası

Yapı ve Kredi Bankası

AG Anadolu Grubu Holding

Akfen Yenilenebilir Enerji

Akfen Holding

Aslancık Elektrik Üretim

Borusan Holding

Boyabat Elektrik Üretim

Doğan Şirketler Grubu Holding

Doğuş Enerji Yatırımları

Doğuş Holding

Energy Tier 3

ASC Law Office combines established strengths in financing with additional expertise in energy projects and contracts, alongside regulatory and litigation expertise. Clients include banks, industrial conglomerates, and investors. The team also works with energy sector clients on debt restructuring and other operational matters. The team is led by Okan Beygo and Levent Yetkil.

Practice head(s):

Okan Beygo; Levent Yetkil

Testimonials

‘In the last 10 years, we have worked with ASC Law on many occasions. They have been involved in the financing/refinancing of our energy projects, acting as legal counsel either on our side or on the other side. We are very much satisfied with their efficiency and dedication to delivering quality work. They are also focused on client relations, which makes us see ASC sort of an extension of our in-house team rather than an outsourced service provider.’

‘We have primarily worked with Okan Beygo and Levent Yetkil. Okan Beygo has an impressive knowledge and dedication to delivering quality work along with his problem-solving skills in high-complexity issues and solution-oriented approach to close the deal successfully. As well as his broad legal knowledge, we are very satisfied with his ability to outline all commercial outcomes very clearly. His professional and helpful approach confide us to consider him and his team as part of our legal team.’

Key clients

AG Anadolu Grubu Holding

Akfen Holding

Akfen Yenilenebilir Enerji

Aslancık Elektrik

Bendis Holding

Borusan Holding

Boyabat Elektrik

Canadian Solar Construction

CTC Enerji

Doğan Şirketler Grubu Holding

Doğuş Enerji Yatırımları

Doğuş Holding

Gaz Depo

Toren Doğalgaz Depolama

3S Kale Enerji

Commercial, corporate and M&A Tier 4

ASC Law Office provides consultancy services to corporate clients, covering a variety of issues relating to business operations, pre- and post-M&A issues, due diligence, and restructuring. The team also handles cross-border M&A and financing, as well as related disputes disputes. Clients include retailers, tech start-ups, and energy companies. The practice is overseen by Okan Beygo and managing partner Doğan Coşgu.

Practice head(s):

Okan Beygo; Doğan Coşgu

Testimonials

The firm provides first-class corporate, commercial and M&A services. The firm delivers the same quality of work product as large international law firms while providing a level of client service and attentiveness that only can be provided by a boutique firm.

They are definitely a cut above their peer firms in the market. They have worked hard to adopt technology and processes to facilitate their cross-border practice. I think they are the go-to firm for foreign businesses transacting business in Turkey and Turkish businesses transacting business in Europe and the U.S.

I am constantly impressed by the quality of work of the attorneys. I have been particularly impressed by Okan Beygo, Dogan Cosgun, Ayhan Kilinc and Gozde Emek. All of them are great technical lawyers and all of them have problem-solving abilities as good as any other attorneys you will find anywhere.

The team is very experienced and professional. They can think out of box and do not give up finding formula and solutions if one necessary. They are very positive and constructive on problem solving. Strong personal skills and empathy skills that a good team requires.

Key clients

AG Anadolu Grubu Holding

Toksöz Spor

Ming Yang Wind Power Co.

Quantumdot Global

İstanbul Memorial

EHM Mağazacılık

Yeni Mağazacılık

CTC Enerji Madencilik

Atalian Entegre Tesis

Atalian Güvenlik

Ekol Teknik

EVD Enerji Yönetimi

Denizolgun Group Companies

NGM Yapım

The firm: ASC Law is a leading full-service law firm with its unique composition of consultancy, litigation, and enforcement/debt collection departments. Bringing together more than 50 lawyers and 170 employees in total, it has been serving domestic and international clients since 2001.

ASC has extensive experience in the structuring of complex transactions and of the different demands of clients and thus the ability to understand the needs of the parties involved in a particular transaction. ASC represents a variety of major multinational corporations, banks and financial institutions located in Turkey and abroad from diverse industries including energy and natural resources, telecommunications, real estate, construction, transportation and retail.

Areas of practice: ASC is mainly an excellent resource for all areas of Turkish law and particularly specialises in project finance, banking and finance, acquisition finance, IPO, capital markets, mergers and acquisitions, derivatives, corporate, litigation, arbitration, real estate, structured finance, intellectual property and labour law among the others.

ASC creates synergy by combining its extensive expertise in energy and finance and advises both lenders and borrowers in relation to project finance deals in the energy industry. ASC has been acting as legal counsel in various energy financing deals, including hydro-power plants, wind farms, biomass plants and solar farms.

ASC has significant expertise and experience in financial debt restructuring deals. This vast experience includes all complex industries such as energy, infrastructure and retail. Two recent key mandates of ASC on financial debt restructuring are (i) acting as local counsel to the lenders on the restructuring of $5.5bn debt of a leading conglomerate and its group companies extended by 13 different banks (largest debt restructuring ever in Turkey in terms of debts restructured) and (ii) acting as the local legal counsel to the lenders in the $1.6bn financing of the indirect shareholder of Turkey’s largest mobile operator and currently advising a reputable Turkish bank on refinancing of the same existing loan facilities.

M&A is another ASC specialty and the firm has taken part in numerous M&A deals. Recent experience of ASC includes acting as legal counsel to a conglomerate on sale of 100% shares of the franchise operator of a leading global fast food company.

ASC also provides its clients with top-notch legal advice in capital market deals. The firm regularly participates as issuers’ or underwriters’ legal counsel for initial public offerings, issuance of bonds, and other securitisations in Turkish and international capital markets. ASC has acted as legal counsel to a reputable food products wholesale and retail company on its initial public offering, the largest IPO in Turkey in recent years.

ASC has significant experience in litigation with regards to private and public laws; such as labor law, commercial law, real estate law, expropriation law. ASC has extensive knowledge and experience in national and international arbitration proceedings and has represented telecom and construction companies in international arbitration proceedings.

The litigation team works closely with the corporate/transactional team to make ASC one of the few full-service law firms in Turkey.

Department Name Email Telephone
Banking and Finance, Capital Markets Okan Beygo okan.beygo@aschukuk.com
Litigation, Arbitration Dogan Cosgun dogan.cosgun@aschukuk.com
Banking and Finance, Project Finance, Energy and Natural Resources, Debt Structuring Levent Yetkil levent.yetkil@aschukuk.com
Litigation Cem Keser cem.keser@aschukuk.com
Bankruptcy and Enforcement Caglar Kokturk Akoymak caglar.kokturk@aschukuk.com
Banking and Finance, Capital Markets Ela Sari ela.sari@aschukuk.com
Real Estate Cagla Sahin Aksu cagla.aksu@aschukuk.com
Arbitration Hilal Bayar hilal.bayar@aschukuk.com
CEO Ayhan Kilinc ayhan.kilinc@aschukuk.com
M&A, Corporate and Capital Markets Dogan Cosgun dogan.cosgun@aschukuk.com
Debt Structuring, Banking and Finance and Project Finance Fulya Sert fulya.sert@aschukuk.com
Energy, Construction and Project Finance Oya Gokalp oya.gokalp@aschukuk.com
M&A, Corporate, Capital Markets Sila Ozturk sila.ozturk@aschukuk.com
Photo Name Position Profile
Mr Murat Aksu  photo Mr Murat Aksu Founding Partner
Ms Begum Busra Aslan  photo Ms Begum Busra Aslan Associate
Ms Hilal Bayar  photo Ms Hilal Bayar Senior Associate
Mr Okan Beygo  photo Mr Okan Beygo Managing Partner
Ms Beste Bundur  photo Ms Beste Bundur Associate
Mr Batuhan Caglar  photo Mr Batuhan Caglar Associate
Ms Aysem Cemre Caglayan  photo Ms Aysem Cemre Caglayan Associate
Mr Zeki Caliskan  photo Mr Zeki Caliskan Founding Partner
Mr Arda Cosar  photo Mr Arda Cosar Associate
Mr Dogan Cosgun  photo Mr Dogan Cosgun Managing Partner
Ms Bengisu Demiroglu  photo Ms Bengisu Demiroglu Associate
Ms Oya Gokalp  photo Ms Oya Gokalp Senior Associate
Ms Dilara Goksu  photo Ms Dilara Goksu Associate
Mr Sefik Gungordu  photo Mr Sefik Gungordu Associate
Ms Zeynep Kalem  photo Ms Zeynep Kalem Associate
Ms Oyku Su Karahan  photo Ms Oyku Su Karahan Associate
Mr Cem Keser  photo Mr Cem Keser Partner
Mr Ayhan Kilinc  photo Mr Ayhan Kilinc CEO
Ms Caglar Kokturk Akoymak  photo Ms Caglar Kokturk Akoymak Partner
Mr Ege Kugay  photo Mr Ege Kugay Associate
Ms Merve Mert  photo Ms Merve Mert Associate
Ms Gamze Ozdemir  photo Ms Gamze Ozdemir Associate
Mr Umut Oztekesin  photo Mr Umut Oztekesin Associate
Ms Sila Ozturk  photo Ms Sila Ozturk Senior Associate
Ms Irem Sahin  photo Ms Irem Sahin Associate
Ms Cagla Sahin Aksu  photo Ms Cagla Sahin Aksu Senior Associate
Ms Ela Sari  photo Ms Ela Sari Partner
Ms Fulya Sert  photo Ms Fulya Sert Senior Associate
Mr Kemal Taga  photo Mr Kemal Taga Partner
Ms Perit Turan  photo Ms Perit Turan Associate
Ms Gokbuke Deren Vertep  photo Ms Gokbuke Deren Vertep Associate
Mr Levent Yetkil photo Mr Levent Yetkil Partner
Number of lawyers : 50+
Total staff : 170
English
Turkish
French
German
Spanish
Istanbul Bar Association
Union of Turkish Bar Associations

CLIENT: Mustafa Yelligedik, Legal Affairs President
COMPANY/FIRM: AG Anadolu Grubu Holding AS
TESTIMONIAL: ASC Law became an important solution partner for our group companies in a two years period of time beginning from their first step in our group.

They have contributed significantly in many complicated projects from M&A to litigation and enforcement. We consider them as part of our legal team as they are always accessible, determined and dedicated.

Our latest collaboration was on the sale of our shares in a fast food chain and they have handled effectively both the local and global components of the project in a reasonable time frame and just before this M&A project, they succeeded to close a immovable law suit to our company’s benefit as soon as they were assigned to the case which has lasted more than 30 years before their assignment to the case.


CLIENT: Ilker Bicakci, Chief Legal Officer
COMPANY/FIRM: Alternatif Bank AS
TESTIMONIAL: Our experience with Aksu Caliskan Beygo Attorney Partnership has been most positive. We have received clear and timely answers to our queries and our concerns were addressed in a professional as well as congenial manner.

We have worked with the firm on our latest effects of several legislation on banking services and also derivatives and treasury transactions which were handled with ease and effectiveness. The firm’s thoroughness, dedication to its clients, and command of the law are a perfect complement to its availability for a successful client-attorney relationship.


CLIENT: Onur Gunel, General Counsel
COMPANY/FIRM: BeIN Media Group – Turkey
TESTIMONIAL: We are working with Aksu Caliskan Beygo Attorney Partnership on various matters but mainly in relation to our labour law and commercial disputes. We are very much satisfied with their efficiency and dedication to delivering quality work. They are also quite focused on client relations which makes us see ASC sort of an extension of our in-house team rather than an outsourced service provider.


CLIENT: Anil Coskun, Finance Assistant Manager
COMPANY/FIRM: Dogus Holding AS
TESTIMONIAL: From 2010 to date, we have worked with ASC Law on many occasions. They have been involved in the financing/refinancing of our energy projects acting as legal counsel either on our side or on the other side. We are very satisfied with the quality of their services and their impressive command of the finance law and transaction structuring. Thanks to their continuous support, we achieved the deadlines for our projects in each case.


CLIENT: Feyza Torlak, Legal Counsel
COMPANY/FIRM: Yapi Kredi Bank
TESTIMONIAL: We have been working with ASC Law firm for many years on various complex matters including high priority large-scale bench mark debt structuring deals, structured finance and treasury transactions owing to their consistent and top-notch legal services. For many project and structured finance and refinancing projects, ASC Law provided approachability, competency, professionalism, and understanding with a staff of true professionals in addition to being highly competent and helpful.

One of our latest engagement saw a highly complex and biggest debt restructuring project in the country being handled with ease and elegance. They have always been easily accessible and remain open to any and all queries we have at any time.


CLIENT: Ozgur Uzunoglu, Chief Financial Officer
COMPANY/FIRM: Akfen Renewable
TESTIMONIAL: I have been working with ASC Law since 2018. They have represented our company in relation to financing of our energy projects. They were very friendly, professional and helpful. I am very impressed with their skills, knowledge and solution-oriented approach to resolve the problems. They have contributed tremendously in the successful closing of our projects.

Cumulative Voting System in Privately Held Joint Stock Companies in Turkey

Under Turkish corporate law, the management body of Joint Stock Company is “Board of Directors” and the directors are elected by shareholders through their affirmative votes in shareholders’ meeting ( “general assembly meeting”).  The capacity of shareholders to have an impact on the management of the company depends on one’s number of shares in the share capital of the company as it reflects upon one’s power in voting for the election of the board of directors.

Shareholders don’t have any direct management rights but indirectly impacts the company’s management and policies through their voting power for the appointment of the board members. Voting rights belong to shareholders due to their ownership of shares. Each share gives shareholder at least one voting right and in the general assembly, voting rights are proportionate to one’s amount of shares. Shareholders voting in proportion with their shares in the general assembly is known as the “straight voting system”.

As an alternative to straight voting system, “cumulative voting system” is regulated under article 434/4 of Turkish Commercial Code (“TCC”); which enhances the shareholders’ ability to have an impact on the selection of board members of the privately held joint stock companies. Cumulative voting system, especially in privately held joint-stock companies where there is no controlling majority shareholder and an alliance is necessary due to the multiplicity of shareholding, increases each shareholder’s involvement in the management, along with providing a potential for minority shareholders to be represented more in the board of directors.

1. MAJORITY RULE AND VOTING SYSTEMS

One of the main principles of joint-stock companies is the majority principle. Accordingly, in general assemblies decisions are made in line with the majority. Majority is achieved by the amount of shares a shareholder owns, not by the number of shareholders. The voting rights are calculated in proportion with one’s shares in the share capital of the company.

To implement the majority rule in an absolute form would bring the danger of minority shareholders’ rights being violated or it might cause failure in decision-making due to having multiple minority shareholders. In order to eliminate such danger and enable the minority to be represented in the company’s management, the lawmaker foresaw certain mechanisms. One of these mechanisms is the “cumulative voting system” relating to the selection of the board of directors in the general assembly.

Customarily, in general assemblies of joint-stock companies there are two different methods of voting. The first method is the “straight voting system” where each share authorises one voting right to vote for each board member candidate. In this system, shareholders who own the majority of the shares of the joint-stock company have the opportunity to select all of the board members as a result of the majority rule. The second method, “cumulative voting system” attempts to enhance the power of minority votes by providing shareholders to almost cumulate their votes and then divide it up. In this system, the shareholder owns a voting right equal to the multiplication of the number of board member candidates and his/her own shares. Unlike the straight voting system where each board member is elected one by one, the cumulative voting system requires board of directors to be chosen all together at once. As the latter allows minority shareholders to form an alliance to vote for one or two candidates therefore enabling their representation, the cumulative voting system is an exception to the common majority rule in joint-stock companies.

2. THE PRINCIPLES OF CUMULATIVE VOTING SYSTEM

2.1 Cumulative Voting System For Privately Held Joint-Stock Companies Is a Method Accepted by TCC: Cumulative voting system has been accepted for privately held joint stock companies under article 434/4 of the TCC. With article 434/4 of TCC, Trade Ministry was delegated the authority to regulate the cumulative voting system for privately held joint-stock companies. Pursuant to this, The Trade Ministry published the “Communique Regarding the Fundamentals of Using the Cumulative Voting System in the General Assemblies of Privately Held Joint-Stock Companies” (“The Cumulative Voting System Communique”) through the Official Gazette dated 29.08.2012 and numbered 28396. Accordingly, the terms and operation of the voting system in privately held joint-stock companies, along with the calculation of the votes are subject to The Cumulative Voting System Communique.

2.2 Objective of the Cumulative Voting System is to alleviate the Representation of Minority Shareholders in the Board of Directors: As a rule, in joint-stock companies, the decisions of the general assembly are in line with the wishes of the shareholders who own the majority of the votes. As a result of the majority rule, in general assembly’s relating to the election of the board of directors, the members are selected according to the will of the majority; therefore, the minority shareholders do not have an impact on the election. The cumulative voting system provides an opportunity for shareholders with lesser shares to cumulate their voting rights and use it effectively to have an influence on the election of the board members. This method puts forward a legal mechanism which allows minority shareholders to be represented in the board of directors in relation to their rate of shares.

2.3 Cumulative Voting System is a Method Which Can Only Serve the Election of Board of Directors: In line with its objective, the cumulative voting system is reserved for the election of board members in the general assembly. In other words, such voting system can neither be used in a general assembly unrelated to the election nor be applied to any other agenda in an assembly where board of directors are elected.

2.4 Cumulative Voting System, Subject to Demand before Each General Assembly (As an Alternative to Straight Voting System) Is a Discretionary System: Although there should be an explicit provision in the company’s articles of association for cumulative voting to be implemented, this does not come to mean each election of the board of directors must use cumulative voting. To include the cumulative voting system in the articles of association does not remove the straight voting system altogether; however, it allows the invocation when the shareholders specifically request it as an alternative to the straight voting system. Thus, a shareholder who plans on voting under the cumulative system must inform the company at least a day prior the general assembly where the board of directors will be elected. Without such notice, the relevant general assembly will operate with the straight voting system. To elect the board of directors via the cumulative voting system, notice by only one shareholder prior to the general assembly would suffice. In such scenario, all shareholders (including ones who have not given any notice) must vote under the cumulative system. In other words, upon at least one shareholder’s demand, all shareholders are obliged to use their voting rights according to the cumulative voting system.

2.5 In Cumulative Voting System, It Is Substantial That All The Board Members Are Elected in The Same General Assembly. As a general rule, under the cumulative voting system, partial election of board members is prohibited. All members must be elected in the same general assembly meeting and take office for the same duration. Therefore, in case of a vacancy on the board, all the remaining members’ office terminates, and the board of directors must be reconstituted. The obligation to elect all members at once, the vacancy on the board, and certain exceptions are thoroughly explained below under (6) “The Effect of a Vacancy on the Board of Directors to the Cumulative Voting System”.

3. COMPARING CUMULATIVE VOTING SYSTEM WITH STRAIGHT VOTING SYSTEM

3.1 In the Case of Electing Board Members, “Cumulative Voting” Is an Alternative to Straight Voting Where Minority Shareholders’ Voting Power Is Enhanced: Straight voting system is accepted by TCC regarding all general assembly resolutions and it depends on the principle where a shareholder’s voting rights are proportional with her shares in the share capital of the company. So, the rule in the straight voting system states that each shareholder can vote for each matter with his/her voting power, which is proportionate and limited to the quantity of their shares. Similarly, in general assembly where board members are elected, straight voting allows shareholders to vote in proportion to their share quantities for each candidate separately. Therefore, each candidate is being voted severally; and in line with the majority rule, the candidate voted by the majority shareholder is elected as the board member. Whereas in the cumulative voting system, the voting right is attained by the multiplication of a shareholder’s number of shares and the number of member candidates. The shareholder can use his/her votes in only one candidate or can divide up the votes between several members. Thus, shareholders’ voting rights are calculated cumulatively, allowing them to distribute between candidates as they wish. Due to this, unlike the straight voting system where each board member is selected individually, under the cumulative voting system there is only one voting for electing all the board members. As a result, board member candidates are arranged from most voted to least voted, and from such sequence the number of available board seats are filled.

3.2 In a scenario for a company which has a share capital of TL 100 (hundred) (100 shares with the nominal value of TL 1), A owns 70% and B owns 30% of shares. In the election for the board which consist of 3 (three) members, A puts forward X, Y, Z candidates and B proposes Q, P, R. The calculation for such election under (i) the straight voting system and (ii) the cumulative voting system will be as explained below.

Straight Voting System Cumulative Voting System
For election of the board which consists of 3 members, A has 70 and B has 30 voting power. For election of the board which consists of 3 members, A has (70×3=210 votes) and B carry (30×3=90 votes).
Under any circumstances, due to A having the majority with 70% of voting rate; X, Y, Z would be elected as the board members. Regarding A’s distribution of votes:

X=90 votes

Y=90 votes

Z=30 votes

Regarding B’s distribution of votes:

Q=90 votes

P=0 votes

R=0 votes

There would be the above outcome.

B would not be able to put even one of its candidates in the member seat. As a result of cumulative voting; in the ranking which would be held amongst X, Y, Z, Q, P, R; the 3 most voted candidates (X, Y, Q) will form the board of directors. Therefore, B would have the opportunity to have 1 representative in the board.

4. THE REQUIREMENTS TO APPLY THE CUMULATIVE VOTING SYSTEM

4.1 The Articles of Association of the Company Must Explicitly State the Cumulative Voting System: There are 2 fundamental arrangements that a joint-stock company’s articles of association must include in order to apply cumulative voting for the election of board of directors.

4.1.1 An Explicit Provision Regarding the Cumulative Vote: There must be an explicit and clear provision in the articles of association stating that all the shareholders can cumulatively vote for one or more board members in the general assembly and that upon request of the shareholders, cumulative voting is available as an alternative.

4.1.2 A Fixed Number of Board Members Which Is Not Less Than Three: In order for the cumulative voting system to operate, the board of directors must at least consist of 3 members and accordingly, the articles of association must include a fixed number of members which is also not less than 3.

4.2 There Must Be No Provision in The Articles of Association Which Disable the Cumulative Voting System: According to the Cumulative Voting System Communique, it is prohibited for a privately held joint-stock company to include a provision in its articles of association which render the cumulative voting system inoperative.

4.2.1 Nomination Privilege: Under article 360 of the TCC, there is a privilege allowing certain shareholder groups to be represented in the board of directors, thus allowing nomination of a candidate. If the cumulative voting system is to operate, the articles of association must not include a provision relating to the candidate nomination privilege under article 360 of the TCC.

4.2.2 Privilege in Voting: Under article 479 of the TCC, there is a privilege which allows attainment of at most 15 different votes for equal nominal shares. If the cumulative voting system is to operate, the articles of association must not include a provision relating to the privilege in voting under article 479 of the TCC.

4.3 It Is Mandatory to Notify the Company before the General Assembly That the Cumulative Voting System Will Be Applied: The explicit provision in the articles of association is not sufficient to use cumulative voting. A shareholder who wants to vote under the cumulative system must provide a written notice to the company at least 1 (one) day before the general assembly. Therefore, without any written notice by a shareholder; as with any other agenda item, the straight voting system will be used for electing the board of directors.

4.4 The Straight Voting System Is Applied for All the General Assembly Resolutions except the Election of The Board of Directors: Even if a shareholder has provided a written notice and the board of directors will be elected with the cumulative voting system, the other agenda items of the general assembly will be subject to the straight voting system. Thus, in the relevant general assembly, cumulative voting system and straight voting system would be applied together, with the cumulative system being limited to the election of the board members.

4.5 General Assembly Announcements Must Include Statements Regarding the Cumulative Voting System: The joint-stock companies which implement the cumulative voting system must include explanations of the cumulative voting system in the general assembly announcements and on the website, if they send out an announcement inviting relevant people to the general assembly.

4.6 In the General Assembly, Cumulative Votes Are Given Via Ballots: Cumulative votes are given via written ballots which indicate the distribution of the cumulative vote, along with including the voter’s number of votes, name, surname, and signature. Even if there is no instruction under the certificate of representation regarding cumulative voting, as it is obliged to vote in such manner upon the request of any one shareholder or representative, the representative votes under the cumulative system when obliged. If there are no specific instructions under the certificate of representation, the representative decides on the distribution of the votes.

5. THE METHOD TO CALCULATE THE CUMULATIVE VOTE AND FORMULAS

 5.1 The Distribution of the Cumulative Vote and Utility Maximization: It is in the shareholders’ discretion to give a written notice to invoke the cumulative voting system, to decide to vote in the general assembly, and to divide their votes. Therefore, the ability to use the voting rights cumulatively does not in itself bring a representation guarantee in the board for the minority shareholders as they can distribute their votes as they intend to.

Nevertheless; if the shareholders want to be represented in the board and elect the optimum number of board members, they should determine the number of members their votes can elect, calculate how the distribution between the candidates should be made, and divide their votes in an optimal manner. The cumulative voting system does not guarantee representation of the minority shareholders in the board, however, depending on the composition arising from the mathematical calculation of probabilities, such representation is enabled. Therefore, each shareholder should make a calculation regarding their shares and the candidate number; and according to the outcome, shareholders should make an optimum level distribution of their votes to choose the board members. On the other hand, if the shareholder who is voting cumulatively has voted for more than one candidate without indicating any specific division, it is assumed that the votes are distributed equally between the candidates.

5.2 Formulas relating to the Calculation of the Cumulative Vote: The two formulas of the cumulative voting system which depend on variables are explained as below.

5.2.1 The Calculation of The Minimum Requisite Share/Vote for the Desired Number of Board Members to be Elected: The below formula calculates the minimum requisite of share/vote for shareholders to use in order for the desired number of members to be elected for the board.

P2 = P1×Y2 +1
Y1+1

 

P2 = Requisite Number of Share/Vote for the Desired Number of Board Members To Be Elected.
P1 = Total Number of Share/Vote
Y2 = Desired Number of Members To Be Elected
Y1 = Total Number Of Members To Be Elected

 

5.2.2 Calculation of the Number of Candidates to be Chosen for the Board of Directors with Reference to One’s Owned Shares/Votes: Taking a reference from the formula above in section (5.2.1) regarding the number of the shareholder’s owned share/vote, the below formula creates the possible number of members which can be elected by that shareholder.

 

A = (S-1) x (K+1)
C

 

A = Number Of Members Which Can Be Chosen With The Owned Share/Vote
S = Number of Owned Share/Vote
C = Total Number of Share/Vote
K = Total Number of The Members To Be Elected

 

5.2.3 Principles of Applying the Formulas and Examples: From the outcomes of the calculations made above in section (5.2.1) and (5.2.2); (i) the P2 value in the first formula is the number of share/vote thus any fractions should be disregarded and (ii) the A in the second formula is the number of board members thus any fractions should be disregarded. Additionally, the share/vote number calculated under the above formulas are based on share numbers and do not represent the share’s equivalent in percentage. Therefore, in application of the above formulas, the shareholder’s share/vote number should be taken into account rather than the percentage of his/her shares within the company’s capital.

In applying the above formulas, below is given the minimum requisite number that a shareholder must have to be able to choose the desired number of the board members in a joint-stock company which issues 10,000 shares and votes, each consisting of TL 1. Table-1 depicts a scenario where 7 (seven), whereas Table-2 depicts an example where 11 (eleven) members are to form the board of directors.

Table – 1
A BOARD WITH 7 MEMBERS
Desired Number of Board Members to be Elected Requisite Number of Shares/Votes
1 1251
2 2501
3 3751
4 5001
5 6251
6 7501
7 8751
Table – 2
A BOARD WITH 11 MEMBERS
Desired Number of Board Members to be Elected Requisite Number of Shares/Votes
1 834
2 1667
3 2501
4 3334
5 4167
6 5001
7 5834
8 6667
9 7501
10 8334
11 9167

6. EFFECT OF A VACANCY ON THE BOARD OF DIRECTORS TO CUMULATIVE VOTING SYSTEM

 6.1 General Rule Regarding the Prohibition on Filling the Vacancy on the Board: The Cumulative Voting System Communique article 5 paragraph 8 states: “The law numbered 6102 states that in case of a vacancy on the board under article 363 or a dismissal from the office under article 364; if the member who did not fulfil the office’s duration has been chosen with the cumulative voting system, other members are dismissed from office collaterally and a new election is made to choose the new board of directors. Nevertheless, this rule does not apply when the membership ends by itself under article 363 paragraph 2, or when the termination’s justification under article 364 is accepted by the court.” According to this regulation, in case of a vacancy on the board under article 363 of the TCC or a dismissal of board member under article 364 of the TCC the vacancy cannot be filled via another cumulative voting system. In other words, a temporary member cannot be appointed by the board or be submitted to the approval in the general assembly.

 6.2 Exceptions to the General Rule: As a rule, if the board has been selected in a cumulative voting system and one of the member’s office ends before it is due, all the other members’ offices are terminated. In scenario, a new general assembly is convened to reconstitute the board and choose the members again. Although this is the main principle, there are certain exceptions. As the Cumulative Voting System Communique article 5 paragraph 8 states, depending on the existence of the conditions and circumstances stated below, the board of directors can appoint a temporary board member to submit it for the general assembly’s approval in case of a vacancy on the board under article 363 of the TCC:

 6.2.1 Non-completion of the Office by a Member Who Has Been Elected by the Majority Shareholders: If the member in question has been elected by the affirmative vote of the majority shareholder, other members of the board continue their offices. In this scenario, the discharged office can be filled through the board’s decision appointing a new member.

 6.2.2 Membership Ending by Itself under Article 363/2: The article 363/2 of the TCC states: “if a board member is declared bankrupt or under interdiction or a lawful condition for the membership loses its qualification envisaged under the articles of association; then such membership can be terminated without any proceeding”. Therefore, in cases of bankruptcy declaration, under interdiction or losing of envisaged qualifications under the articles of association (e.g. a certain duration of professional experience, an affiliation with a specific occupational group, not being sentenced by particular crimes etc.) membership ends by the order of the law. In such resolution of office by the statute, a new member can be appointed by the board’s decision which can invoke the gap-filling method.

 6.2.3 Dismissal from Office of the Board Member by the General Assembly Whose Justification Has Been Found Reasonable by the Courts (Discharge): Article 364/1 of TCC 1 states that: “Even if the members of the board are appointed by the articles of association, they can be dismissed from office when there is no relevant section in the agenda or even if there is, when a rightful justification exists.” Therefore, as a rule, in the straight voting system the general assembly holds the power to always end one’s membership with a rightful justification. When the termination by the general assembly is according to a court’s judgment, other board members continue their membership and a new member can be appointed by the board’s decision which can invoke the gap-filling method.

CONCLUSION

1. The cumulative voting system is an effective and functional legal mechanism which can enable the optimal representation of the minority shareholders in the privately held joint-stock companies under Turkish corporate law.

2. The cumulative voting system can increase the representation ability of minority shareholders either by themselves or by the aggregation of their vote/capital powers, especially when it is compared with the nomination privilege under article 360 of the TCC. Because, under article 360 the TCC, nomination privilege, shareholders are only granted the right to propose a candidate to the general assembly which does not guarantee that the candidate will be elected. In the end, the right to choose a board member is reserved to the general assembly and the general assembly has the authority to not choose the candidate. Whereas in the cumulative voting system, the shareholder’s nominated candidate is elected so long as there are sufficient mathematical voting right/shares.

3. The cumulative voting system can be regulated in a discretionary manner under the AoA and it can be used as a backup to be invoked when there is a controversy between the shareholders. In this aspect, without any conflict between the shareholders, the cumulative voting system will not be needed; however, if a disagreement occurs, any shareholder can demand the application of the cumulative voting system, creating a high possibility of representation in the board. Therefore, the cumulative voting can be evaluated as a system invoked when there is a conflict, which allows shareholder representation in the board of directors without being dependent on the majority.

Okan Beygo, Partner

Okan BEYGO, name partner of Aksu Caliskan Beygo Attorney Partnership, evaluates the future direction of the firm and the legal profession.

What do you see as the main points that differentiate Aksu Caliskan Beygo Attorney Partnership from your competitors?

Aksu Caliskan Beygo Attorney Partnership, or ASC Law Office, is one of the preeminent law firms in Turkey. The firm was registered as the sixth member of the Istanbul Bar Association and it has been serving its clients for almost two decades. Our strength comes from our past, our dedication and most importantly our impeccable reputation as lawyers that we have earned throughout the years.

We are proud to be one of the largest full-service law firms that uniquely offers Consultancy, Litigation and Enforcement/Debt Collection services under one roof. With more than 50 lawyers, we are regularly recognized as one of the most successful in the country. Our HR approach is also associated with our experience. Most of our team members were hired as trainees and then gained long tenures with our firm which enables us to have long, steady and trustworthy relationship with our clients.

ASC Law employs one of the best consultancy departments in the country, with impressive teams in banking and finance, capital markets, M&A and restructuring. The litigation practice includes top-notch litigators whom have been handling some of the most complex litigations in Turkey and complemented by the extremely successful Enforcement/Debt Collection department which serves to major banks and conglomerates of the country.

Which practices do you see growing in the next 12 months? What are the drivers behind that?

As everyone would agree, the agenda of the next 12 months will be shaped by the coronavirus outbreak. Once the turmoil hopefully comes to an end, we will have two things in our hands: A deep financial crisis and the abundance of liquidity circulated against it. Based on our past experience, we know the areas to come forward in this environment: Banking, project financing, debt restructuring, M&A, IPO, bond issues and litigation. We have witnessed this twice with Turkey’s crises in 2001 and the global crisis of 2008 which have actually brought us as Aksu Caliskan Beygo Attorney Partnership to today’s valuable assets.

We can also expect that the state intervention will reach its heights, mercantilist and Keynesian approaches will be popular once again, probably for a not-so-short period. This can bring in new opportunities for legal professionals who have expertise in working with public institutions.

What’s the main change you’ve made in the firm that will benefit clients?

We have recently appointed a non-lawyer CEO with technology and management background in order to handle the digital transformation process effectively. Throughout the last two decades we have managed to transform our office into a dynamic and competitive structure. Now the recent challenge is the utilization of technology in every possible aspect. We want to make sure that we and our clients do not lag behind in following and adapting the changes. We aim to achieve digital transformation in a professional manner and make sure that we combine our legal experience with the must haves of the new world.

Is technology changing the way you interact with your clients, and the services you can provide them?

Yes, definitely. We of course welcome the now-conventional tools like social media which speeds up our communication. However, there is much more than that, one specific example: It provides automated systems between us and our clients which essentially removes the physical barrier between in-house legal departments and our office. We can carry out the file transfer, observe the progress and review the performance indicators, sharing the same interface which is extremely helpful especially with the big companies.

Can you give us a practical example of how you have helped a client to add value to their business?

In a recent case, we have helped our client from Republic of Korea to construct a global tech business with a significant success potential. Our client is an innovator with a promising and unique technology. Along with the extensive legal work, we helped the client in reaching conglomerates from diverse industries for potential cooperation and we have also facilitated our trusted network for him to reach the venture capital funds. Again thanks to our long-term partnership, we helped the client to create a presence in the US for global outreach. We have always tried to understand the business perspective and not to limit our problem solving process with just legal domain. In this way we aim to help our clients create sustainable long-term business plan.

Are clients looking for stability and strategic direction from their law firms – where do you see the firm in three years’ time?

I think the answer to the first question simply depends on the clients. There are some clients looking for stability given the fact that our world is a lot more complicated now than ever and stability might be the right approach for some businesses. However, there are also some clients who believe that stability means slow change and a dynamic environment brings more opportunities. For example, one might envisage the time, which is not that far, when the contracts will be all about transactions on blockchain and cryptocurrencies are circulated by some “central banks”. I personally believe that no one should ignore the fact that business world is very dynamic and clients must be able to react quickly to changes and adopt to new technologies. In my opinion, most clients will in fact look for more strategic direction from their law firms in an unstable post virus environment that awaits us.

For the second part of the question, I have been practicing law in a part of the world that business and legal environment changes rapidly. I know that the legal profession requires knowledge and experience but I also understand that we must react and adopt quickly to new technologies and I am extremely confident that our firm shall overcome any challenge that we may face as human race. Therefore, I sincerely see that in three years ASC Law continues to be one of the most successful law firms in Turkey and achieve great success in legal arena