Responsibilities of Board Members of Joint Stock Companies in Turkey – Company Law and Company Law


1. Overview

The main legislation governing the duties, responsibilities and liabilities of board members of Joint Stock Companies in Turkey (JSC and LLC) is the Turkish Commercial Code No. 6102 (TCC). As a general rule, the CLC requires directors to act as prudent managers and to protect the interests of the company in the performance of their duties in good faith, which means that no general liability can be stipulated against directors in damage or loss if such members can prove that they acted in good faith as prudent rulers.

2. Legal responsibilities of members of the board of directors of joint stock companies

The TCC lists a number of different duties and obligations for board members, all of which have distinct responsibilities imposed on members for breaches. The obligations and their corresponding responsibilities arising from the T&Cs are listed below:

a)General rule on directors’ liability

The general rule governing all the obligations and responsibilities of the members of the board of directors of capital companies is set out in article 553 of the ICC, which stipulates that in cases where the shareholders, the members of the board and the managers (those who have delegated powers) breach their obligations under the law or the company’s articles of association (AoA), they will be liable for damages suffered by the company, the shareholders of the company and/or the creditors of the company, to the as a result of such violation.

b)Specific Duties and Responsibilities of Board Membersp

Once the tourism license has been obtained, the company must apply for a medical license (health tourism certificate) from the Ministry of Health. These applications must be submitted to the relevant Provincial Health Directorate where the business is located and are subject to a separate set of requirements. These requirements include (but are not limited to) signed protocols with various licensed medical institutions, infrastructure for a call center, and employment of qualified personnel.

In addition to this general rule, there are specific provisions provided for in the TCC and other secondary regulations that govern the duties and responsibilities of board members. These include responsibilities and obligations such as:

  1. Duty of care and loyalty

  2. Prohibition on dealing with the company & contracting loans from the company

  3. Good Company Obligation Books

  4. Documents and declarations contrary to the law

  5. Misleading capital statements

  6. Irregularity in determining the value of capital in kind

  7. Appropriate raising of capital from the public

It is important to note here that the above list is not exhaustive of the potential responsibilities of board members. It should also be noted that each duty and responsibility has its own set of penalties and consequences, both legal and criminal.

For example, one of the duties and responsibilities of members of the board of directors of joint-stock companies is to provide truthful declarations to the authorities concerning the capital of the company, and a set of specific provisions will apply in the event of violation of this to have to. Thus, article 550 of the CIC provides that if the capital of the company turns out to be released when it is not, the persons who created this illusion, as well as the authorities of the company, are liable for the sums unpaid, provided they are in fact negligent. This also includes members of the company’s board of directors. A prison sentence of three months to two years may also be applicable for this offence.

3. Legal responsibilities of managing directors

The TCC allows board members to delegate their representational duties and powers to other board members and/or third parties. However, it is important to note here that at least one director must always hold the power of representation of the company.

Delegation of authority is an important tool for board members because it can allow board members who delegate their powers of representation to be freed from the responsibilities associated with their board membership. As per CCI 553/2, in the case of delegation of authority, those who have delegated authority cannot be held responsible, except to prove a failure to choose appropriate persons to delegate authority.

If a delegation of power is possible, it also has its limits. According to the law, some of the powers and duties which cannot be delegated to third parties are the following (the following list is not exhaustive):

  1. High-level management of the company and authority to issue orders for high-level management;

  2. Determine the organization of the management of the company;

  3. Establish the organization of accounting, financial audit and financial planning;

Accordingly, if any power is delegated, and such power cannot be so delegated pursuant to law or the AoA, such delegation shall be considered unlawful and the Board Member(s) shall still be held liable. even if the act of negligence was committed by the delegated third party.

4. Public Debt Liabilities of Board Members

Liabilities of members of the board of directors of capital companies arising from the public debts of the company are regulated separately and subject to different rules and conditions. Accordingly, board members may be held personally liable (along with their personal assets) for a corporation’s tax liabilities, regardless of their fault or negligence, in the event that any of the events below would happen:

  1. the initiation of collection proceedings against the company for a tax payment obligation (tax, default interest or tax penalty) resulting from the failure to fulfill tax debts in a timely and appropriate manner;

  2. as a result of the collection process in (i) above, the inability of the tax administration to collect its tax claims due to the inadequacy of a company’s assets after the collection process by the administration tax; Where

  3. (iii) a tax liability of the company becomes due as a result of the legal representative’s failure to meet its tax payment obligations.

The failure of a member of the board of directors to fulfill their tax obligations (ie the occurrence of an obligation to pay tax) is automatically considered to be the fault and/or negligence of the legal representative.

4. Closing

It is important to note here again that the above does not provide a complete list of all potential responsibilities that a board member will assume. The liability of members of the board of directors of joint stock companies is a complex subject which is governed by various laws and secondary regulations. Since directors are those who are effectively in charge of the day-to-day running of the JSC and are the signing representatives of the company, they bear significant liability for their actions that result in loss or damage, or unpaid debts. It is therefore imperative that individuals who will take on board member roles in companies in Turkey understand the duties, responsibilities and risks of such a position.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.


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