ACCORDING TO ARTICLE 2/2 OF THE LAW NO. 1163 ON COOPERATIVES, CRIMINAL LIABILITY OF COOPERATIVE MANAGERS FOR FAILURE TO CONVENE THE GENERAL ASSEMBLY MEETING AND PREPAYMENT METHOD

Cooperatives are organizations with legal entities engaged in economic activities. The legal obligations and criminal liabilities of cooperative managers are regulated by the Cooperatives Law No. 1163 (KK). This article examines the criminal liability of cooperative directors for failure to convene the general assembly meeting and the prepayment method, particularly in the context of Additional Article 2/2 of the Cooperatives Law No. 1163 (KK)

Calling the General Assembly of the Cooperative: Articles 43 and 44 of the KK No. 1163

Articles 43 and 44 of the Cooperatives Law No. 1163 specify who may convene the general assembly of a cooperative. According to Article 43 of the Cooperatives Law No. 1163, the authority to convene the general assembly of a cooperative belongs to the board of directors or any other body authorized to do so by the articles of association and, when necessary, the board of auditors, the supreme union of which the cooperative is a member, and the liquidators.

“1163 Sy KK. Article 43 – (Amended: 6/10/1988 – 3476/10 Art.) The board of directors or any other body authorized in this regard by the articles of association and, when necessary, the board of auditors, the supreme union in which it is a partner and the liquidators have the authority to call the general assembly for a meeting. However, if the general assembly cannot be convened as stated above, the relevant ministry is authorized to convene the general assembly.

This article clearly states who is authorized to call a meeting.

Pursuant to Article 44 of the same law, if the board of directors fails to fulfill the request to call for a meeting within at least 10 days, the general assembly may be called for a meeting by the ministry. In cases where the call is not made by the Ministry, the petitioners who request the convening of the general assembly may apply to the relevant court and request the authority to convene the general assembly from the court itself.

1163 Sy. KK Article 44 – The General Assembly shall be convened upon the request of at least one tenth of the number of shareholders, but not less than four shareholders. If the Board of Directors fails to fulfill this request within at least ten days, the General Assembly may be called to a meeting upon the application of the requestors or directly by the Ministry of Trade, and in the case of building cooperatives, by the Ministry of Zoning and Settlement. If the General Assembly is not convened, the petitioners may apply to the local court and obtain the permission to convene the General Assembly in person.

This article specifies how shareholders can request a meeting.

Criminal Liabilities and KK Additional Article 2/2

In cooperatives, the ordinary general assembly must be held within 6 months from the end of each accounting period and at least once a year. 1163 Sy. In case of non-compliance with this obligation regulated in Article 45 of the KK, criminal sanctions are envisaged for the members of the board of directors of cooperatives according to the Additional Article 2/2 of the law. The penal sanction is specified in the law as imprisonment up to six months and a judicial fine from thirty days to three hundred days.

1163 Sy. KK. Article 45/1: “The general assembly shall convene ordinarily and, if necessary, extraordinarily. Ordinary general assembly meetings must be held within 6 months from the end of each accounting period and at least once a year. (Additional sentence: 18/6/2017-7033/9 Art.) However, ordinary general assembly meetings may be held in a way to cover a maximum of two accounting periods and may be combined, provided that the procedures and principles are shown in the regulation to be made by the relevant Ministry; provided that the cooperative is a partner of the cooperative supreme organization and a relevant item is included in the agenda of the general assembly meeting.”

1163 Sy. KK. Additional Article 2/2: “The members of the board of directors who fail to convene the ordinary general assembly meeting on time as per the first paragraph of Article 45, and the members of the board of directors of cooperatives and supreme organizations who violate the fourth paragraph of Article 2, the second paragraph of Article 8, the first paragraph of Article 16, the second paragraph of Article 66 and the third paragraph of Article 90 shall be sentenced to imprisonment for up to nine months and a judicial fine from thirty days to three hundred days.”

If the members of the board of directors of a cooperative fail to hold the ordinary general assembly meetings for several years on time, not one offense, but multiple offenses will occur. For example, if the members of the board of directors of a cooperative fail to hold the ordinary general assembly meetings for the years 2010, 2011 and 2012 on time, three separate offenses will occur, not one offense. However, if it is concluded that the offense was committed within the scope of the execution of a criminal decision, then the provisions of chain offense will be applied and only the penalty determined pursuant to Additional Article 2/2 of the CC will be increased pursuant to Article 43/1 of the TCC.306Cetin, (2004), 160. 305 Decrees of the 19th CD of the Court of Cassation dated 12.04.2018, E. 2018/2720, K. 2018/4448; dated 09.10.2018, E. 2018/4927, K. 2018/10092, dated 02.10.2018, E. 2018/4631, K. 2018/9724.306 Decree of the 19th CD of the Court of Cassation dated 01.06.2016, E. 2842, K. 2016/18860; Bölükbaş, (2010), 92; Çetin, (2004), 161. Pursuant to Article 82, if the ordinary general assembly meetings are not held for three years, the legal entity of the cooperative will be dissolved; therefore, in a cooperative where the ordinary general assembly meetings for the years 2010-2011-2012-2013-2014 are not held, the members of the board of directors of the cooperative will only be liable for the failure to hold the ordinary general assembly meetings for the years 2010-2011-2012, and they will not be liable for the failure to hold the ordinary general assembly meetings for the years 2013 and 2014.

Prepayment Method

Prepayment is one of the alternative solution methods that has been applied in our law for a long time.The rules regarding the application of this procedure are regulated in Article 75 of the Turkish Criminal Code No. 5237. Prepayment cannot be applied in terms of crimes within the scope of reconciliation regulated between Articles 253 and 255 of the Criminal Procedure Law No. 5271.Some special types of crimes listed in the Turkish Penal Code have been added to the scope of the prepayment, which can only be applied to crimes that require a judicial fine or whose upper limit does not exceed six months imprisonment. Law No. 6763 dated 24.11.2016 and Law No. 7188 dated 17.10.2019 aimed to apply prepayment for more crimes and introduced facilities such as payment in installments.

With the amendment made to Article 75 of the TCC by Article 12 of Law No. 6763, which entered into force upon its publication in the Official Gazette on 02.12.2016, the offense regulated in Additional Article 2/2 of the TCC was included within the scope of prepayment.308 Accordingly, if the member of the board of directors of the cooperative who committed this offense pays the amount specified in the law within ten days upon notification by the public prosecutor’s office together with the investigation expenses, no public prosecution will be initiated against him/her (Article 75/1 of the TCC).If the case has been directly referred to the court pursuant to the provisions of special laws, or if the case has been filed without prepayment, or if the nature of the action subject to the case has changed due to the change of the nature of the action, the public case against him/her will be dismissed when he/she pays the amount of money stipulated in the law together with the trial expenses upon the notification to be made by the judge during the prosecution phase (Article 75/2-3 of the TPC). The investigation and prosecution of this offense stipulated in Additional Article 2/2 of the TCC is not subject to complaint and must be pursued ex officio.Furthermore, the court in charge of this offense is the criminal court of first instance pursuant to Article 11 of Law No. 5235.

Article 2/2 of the Law No. 1163 on Cooperatives provides for serious criminal sanctions for the failure of cooperative managers to convene the general assembly on time.Supreme Court decisions and the prepayment provisions of the Turkish Penal Code provide important guidance on how to apply these criminal sanctions. Cooperative managers should act with these legal obligations in mind.

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