TeliaSonera Sues Turkcell Chairman Over Independence of Company Directors
TeliaSonera says that it has launched legal action against the Chairman of Turkish mobile network, Turkcell after he was accused of repeatedly blocking the appointment of independent directors to the company board.
TeliaSonera says that it has for years argued that the number of independent board members in Turkcell has to increase in order for Turkcell to follow requirements by the Turkish Capital Markets Board and the U.S. Securities and Exchange Commission. Such actions are alleged to have however been blocked by Cukurova and the Chairman of the Board, Mr. Colin Williams.
Presently, Turkcell's board has seven members and the three shareholders each have two representatives on the board of directors. Colin Williams, who has served as an independent board member since May 2006 was appointed as the Chairman last February after the chairman of Cukurova stepped down. The Turkish Capital Markets Board has asked the company to appoint at least two new independent directors to the board.
TeliaSonera has lately put forward formal requests to the Board of Turkcell to add the possibility for Turkcell's shareholders to address the board composition at the upcoming Annual Shareholders' Meeting (AGM). The right for a minority shareholder, with more than 5 percent of the shares in a listed company, to address an issue at the AGM is a basic and clear right under Turkish law.
TeliaSonera says that it has - through the actions of a minority of the Turkcell board members - been denied this legal right. The company says that it is particularly troubling that the Chairman of the Board, Colin Williams, who is the only independent board member and whose vote would have altered the Board's decision, has acted, it says, against the law.
"Following the law is a minimum requirement for a Chairman of a major listed international company. We also believe that issues regarding corporate governance should be openly discussed and decided by all shareholders at the AGM and not be blocked behind closed doors by a minority of the Board," says Cecilia Edström, Senior Vice President and Head of Group Communications.
"We take the fact that Mr. Colin J. Williams has been blocking certain vital corporate governance issues as evidence that he is not acting as an independent member and impartial Chairman of the Board of Turkcell. He should therefore be removed from his duties, in order not to cause the company and its shareholders any further damage," Cecilia Edström continues.
TeliaSonera has an effective 37.1 percent stake as the main shareholder in Turkcell, but it cannot control the company because a special purpose company, Turkcell Holding, holds 51 percent of Turkcell. A total of 53 percent of Turkcell Holding is owned by a Cukurova-Altimo partnership and 47 percent by TeliaSonera. Çukurova and Altimo each effectively hold about 13 percent in Turkcell.
The ownership and control of the company has been a matter of dispute between the shareholders for well over a decade.