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Liabilities Of The Board Members In A Joint Stock Company – Corporate/Commercial Law

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Management and illustration of joint stock firms are&#13
carried out by the board of directors. For this reason, the board of&#13
administrators is viewed as as one particular of most crucial organs of joint&#13
stock companies obtaining broadest representation powers. In this&#13
context, the corporation is managed and represented by the board of&#13
directors for the daily life of a joint stock business.

The board customers have selected liabilities arising out of&#13
general performance of their   responsibilities of management and&#13
illustration of the firm. . In situation of violation of these&#13
obligations with fault, pursuant to the provision of Turkish&#13
Commercial Code No. 6102 (“TCC”) Post 553/1 the&#13
board associates might be held liable for the damages they trigger to the&#13
firm, the shareholders and the  creditors of the&#13


The board users are matter to the obligations established forth in&#13
the TCC, upon their election to the board of administrators. In addition&#13
to the obligations in the TCC, it is possible to impose other&#13
obligations on them by articles or blog posts of association of the organization.&#13
This post will only touch upon some of the typical obligations&#13
of the board arising out of the TCC and the common of treatment that&#13
should be exercised by the board users. We would like to not that&#13
there are other obligations imposed by the  pursuant to the&#13
distinctive provisions of the TCC or current market certain regulations and&#13
restrictions which could be relevant centered on the action places&#13
of the enterprise.

Senior Management and Supervision of the Business

Considering the fact that the board of directors is the executive physique of the&#13
business, the board members are dependable for collaborating in the&#13
management choices of the firm and supervising the&#13
implementation of these decisions. This obligation does not lengthen&#13
to an interpretation to necessarily mean choices regarding all types of&#13
functions of the corporation in each and every single detail are supplied or&#13
supervised strictly by the board of directors. As a make any difference of point,&#13
with the phrase “senior administration” in the indicating of TCC&#13
375/1/a and the phrase “senior supervision” in the&#13
that means of TCC 375/1/e presents an plan about the extent of&#13
involvement by the board of directors in management and&#13

Not Coming into into Transaction with the Company and Not&#13
Borrowing from the Organization

Pursuant to TCC 395/1, the board users simply cannot enter into a&#13
transaction with the company on behalf of on their own or anybody else&#13
without the need of acquiring permission from the normal assembly or else,&#13
the firm may claim that the transaction is invalid. On the other&#13
hand, the aforementioned board member claim that the transaction is&#13

In accordance to the next paragraph of the exact same report, the board&#13
associates aside from shareholders are prohibited from borrowing cash&#13
from the company. Similarly, it is clearly controlled that the&#13
enterprise are not able to supply surety, ensure and assurance for&#13
non-shareholder board associates and simply cannot acquire over the money owed of&#13
these board users. In circumstance of a breach of this obligation, the&#13
TCC lets the creditors of the corporation to directly start out financial debt&#13
enforcement proceedings in opposition to the appropriate board members&#13
relating to the respective quantities owed to the organization.

Non-compete with the Corporation

Pursuant to the Post 396/1 of the TCC, the board users are&#13
prohibited from specifically or indirectly accomplishing the commercial&#13
affairs that slide inside of the scope of the firm’s field of&#13
procedure. Board users may well conduct the aforementioned&#13
transactions in accordance with the law only with the permission of&#13
the standard assembly or in circumstance wherever the content of affiliation&#13
of the corporation supplies for this kind of provision letting the board&#13
customers to contend with the enterprise . Without having the authorization of the&#13
general assembly, the board member who carries out commercial&#13
affairs inside the scope of the company’s discipline of procedure,&#13
will breach this obligation.

Responsibility of Treatment and Obligation of Loyalty

Pursuant to Article 369/1 of the TCC, the board associates are&#13
obliged to fulfill their obligations with the treatment of a prudent supervisor&#13
and to guard the pursuits of the organization. Board members are&#13
obliged to comply with this obligation of care, each when satisfying&#13
their obligations arising out of the law or the article content of&#13
affiliation and for the duration of the management and illustration of the&#13
company. In accordance to the rationale of Article 369 of the TCC, a&#13
“prudent manager” pointed out in the Code should really be&#13
deemed inside the context of “enterprise judgment&#13
” which expression located its roots from the US professional&#13
regulation. In this context, just the reality that a determination of the board&#13
of directors turns out to be unfavorable to the enterprise, does not&#13
give rise to the legal responsibility of the board of administrators. If the board&#13
associates can exhibit that they exercised because of care predicted from&#13
a prudent organization man, and gave a selection on totally-educated&#13
basis, obtaining the needed technical, financial and legal assistance&#13
and acted for the finest pursuits of the firm in their opinion&#13
even if the outcome of the selection is in opposition to the compan’s&#13
gains , these a judgment can’t be considered as violation of the&#13
obligation of treatment. Nevertheless, it really should be highlighted that the organization&#13
judgment rule is a basic principle that is overseas to Turkish Law, as it&#13
was derived from the Widespread Regulation program. Accordingly,the substantial courtroom&#13
judgments are envisioned to condition software of this rule.

Post 369/1 of the TCC also regulates the obligation of&#13
loyalty. This obligation is imposed by the subsequent component of these kinds of&#13
short article: “to secure the pursuits of the enterprise in&#13
accordance with the rule of honesty
”. The board associates&#13
are obliged to prioritize the pursuits of the corporation and to prevent&#13
steps that could damage the business when undertaking the administration&#13
and representation of the enterprise. In addition, the board customers&#13
have obligations of confidentiality arising from their loyalty&#13

C. BREACH OF OBLIGATIONS AND Legal responsibility

If the board associates violate their obligations arising from the&#13
law or the posts of association with fault and the company, the&#13
shareholders or the creditors undergo problems thanks to this violation,&#13
the board users with fault are held liable. If the harm of the&#13
organization has transpired, the corporation or just about every shareholder has the&#13
authority to file an action for compensation. In this case, the&#13
courtroom will choose on the sum of the payment entitled by the&#13
business. If the damage is prompted immediately to the appropriate&#13
shareholder or creditor, the shareholde or lenders has the&#13
authority to demand that the payment be paid immediately to him.&#13
If far more than one particular board customers are liable for the problems, the&#13
tasks of these board users are identified professional-rata to&#13
their respective faults causing the problems.

The motion for legal liability from the board members, must&#13
be filed right before the Industrial Courts of Very first Occasion in which the&#13
principal area of small business of the business is positioned. The statute&#13
of limits for this motion is controlled in Short article 560 of the&#13
TCC as follows:

“The proper to declare compensation towards those accountable&#13
results in being barred by prescription soon after two yrs from the date when&#13
the plaintiff learned the problems and the responsibles, and in any&#13
situation five decades from the day of event of  the act that&#13
prompted the damage. In so significantly, if this act necessitates a penalty in&#13
the which means of legal legislation and is topic to a more time statute of&#13
constraints relating to Turkish Penal Code, this statute of&#13
limits shall utilize to the payment case.”

D. Summary

In circumstance the board users of the firm violate their&#13
obligations arising from the regulation and the posts of association,&#13
they are dependable for the compensation of the damages of the&#13
corporation, shareholders or creditors owing to this violation. Irrespective of whether a&#13
fault is attributable to the board users ought to be decided&#13
according to the “business judgment rule” imported from&#13
the common regulation program to Turkish Legislation.

Originally Published 16 February 2022

The articles of this article is meant to supply a common&#13
tutorial to the subject subject. Professional suggestions ought to be sought&#13
about your precise situations.


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