Liabilities Of The Board Members In A Joint Stock Company – Corporate/Commercial Law
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A. INTRODUCTION
Management and illustration of joint stock firms are
carried out by the board of directors. For this reason, the board of
administrators is viewed as as one particular of most crucial organs of joint
stock companies obtaining broadest representation powers. In this
context, the corporation is managed and represented by the board of
directors for the daily life of a joint stock business.
The board customers have selected liabilities arising out of
general performance of their responsibilities of management and
illustration of the firm. . In situation of violation of these
obligations with fault, pursuant to the provision of Turkish
Commercial Code No. 6102 (“TCC”) Post 553/1 the
board associates might be held liable for the damages they trigger to the
firm, the shareholders and the creditors of the
corporation.
B. Normal OBLIGATIONS ARISING FROM Law
The board users are matter to the obligations established forth in
the TCC, upon their election to the board of administrators. In addition
to the obligations in the TCC, it is possible to impose other
obligations on them by articles or blog posts of association of the organization.
This post will only touch upon some of the typical obligations
of the board arising out of the TCC and the common of treatment that
should be exercised by the board users. We would like to not that
there are other obligations imposed by the pursuant to the
distinctive provisions of the TCC or current market certain regulations and
restrictions which could be relevant centered on the action places
of the enterprise.
Senior Management and Supervision of the Business
Considering the fact that the board of directors is the executive physique of the
business, the board members are dependable for collaborating in the
management choices of the firm and supervising the
implementation of these decisions. This obligation does not lengthen
to an interpretation to necessarily mean choices regarding all types of
functions of the corporation in each and every single detail are supplied or
supervised strictly by the board of directors. As a make any difference of point,
with the phrase “senior administration” in the indicating of TCC
375/1/a and the phrase “senior supervision” in the
that means of TCC 375/1/e presents an plan about the extent of
involvement by the board of directors in management and
oversight.
Not Coming into into Transaction with the Company and Not
Borrowing from the Organization
Pursuant to TCC 395/1, the board users simply cannot enter into a
transaction with the company on behalf of on their own or anybody else
without the need of acquiring permission from the normal assembly or else,
the firm may claim that the transaction is invalid. On the other
hand, the aforementioned board member claim that the transaction is
invalid.
In accordance to the next paragraph of the exact same report, the board
associates aside from shareholders are prohibited from borrowing cash
from the company. Similarly, it is clearly controlled that the
enterprise are not able to supply surety, ensure and assurance for
non-shareholder board associates and simply cannot acquire over the money owed of
these board users. In circumstance of a breach of this obligation, the
TCC lets the creditors of the corporation to directly start out financial debt
enforcement proceedings in opposition to the appropriate board members
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
prohibited from specifically or indirectly accomplishing the commercial
affairs that slide inside of the scope of the firm’s field of
procedure. Board users may well conduct the aforementioned
transactions in accordance with the law only with the permission of
the standard assembly or in circumstance wherever the content of affiliation
of the corporation supplies for this kind of provision letting the board
customers to contend with the enterprise . Without having the authorization of the
general assembly, the board member who carries out commercial
affairs inside the scope of the company’s discipline of procedure,
will breach this obligation.
Responsibility of Treatment and Obligation of Loyalty
Pursuant to Article 369/1 of the TCC, the board associates are
obliged to fulfill their obligations with the treatment of a prudent supervisor
and to guard the pursuits of the organization. Board members are
obliged to comply with this obligation of care, each when satisfying
their obligations arising out of the law or the article content of
affiliation and for the duration of the management and illustration of the
company. In accordance to the rationale of Article 369 of the TCC, a
“prudent manager” pointed out in the Code should really be
deemed inside the context of “enterprise judgment
rule” which expression located its roots from the US professional
regulation. In this context, just the reality that a determination of the board
of directors turns out to be unfavorable to the enterprise, does not
give rise to the legal responsibility of the board of administrators. If the board
associates can exhibit that they exercised because of care predicted from
a prudent organization man, and gave a selection on totally-educated
basis, obtaining the needed technical, financial and legal assistance
and acted for the finest pursuits of the firm in their opinion
even if the outcome of the selection is in opposition to the compan’s
gains , these a judgment can’t be considered as violation of the
obligation of treatment. Nevertheless, it really should be highlighted that the organization
judgment rule is a basic principle that is overseas to Turkish Law, as it
was derived from the Widespread Regulation program. Accordingly,the substantial courtroom
judgments are envisioned to condition software of this rule.
Post 369/1 of the TCC also regulates the obligation of
loyalty. This obligation is imposed by the subsequent component of these kinds of
short article: “to secure the pursuits of the enterprise in
accordance with the rule of honesty”. The board associates
are obliged to prioritize the pursuits of the corporation and to prevent
steps that could damage the business when undertaking the administration
and representation of the enterprise. In addition, the board customers
have obligations of confidentiality arising from their loyalty
obligations.
C. BREACH OF OBLIGATIONS AND Legal responsibility
If the board associates violate their obligations arising from the
law or the posts of association with fault and the company, the
shareholders or the creditors undergo problems thanks to this violation,
the board users with fault are held liable. If the harm of the
organization has transpired, the corporation or just about every shareholder has the
authority to file an action for compensation. In this case, the
courtroom will choose on the sum of the payment entitled by the
business. If the damage is prompted immediately to the appropriate
shareholder or creditor, the shareholde or lenders has the
authority to demand that the payment be paid immediately to him.
If far more than one particular board customers are liable for the problems, the
tasks of these board users are identified professional-rata to
their respective faults causing the problems.
The motion for legal liability from the board members, must
be filed right before the Industrial Courts of Very first Occasion in which the
principal area of small business of the business is positioned. The statute
of limits for this motion is controlled in Short article 560 of the
TCC as follows:
“The proper to declare compensation towards those accountable
results in being barred by prescription soon after two yrs from the date when
the plaintiff learned the problems and the responsibles, and in any
situation five decades from the day of event of the act that
prompted the damage. In so significantly, if this act necessitates a penalty in
the which means of legal legislation and is topic to a more time statute of
constraints relating to Turkish Penal Code, this statute of
limits shall utilize to the payment case.”
D. Summary
In circumstance the board users of the firm violate their
obligations arising from the regulation and the posts of association,
they are dependable for the compensation of the damages of the
corporation, shareholders or creditors owing to this violation. Irrespective of whether a
fault is attributable to the board users ought to be decided
according to the “business judgment rule” imported from
the common regulation program to Turkish Legislation.
Originally Published 16 February 2022
The articles of this article is meant to supply a common
tutorial to the subject subject. Professional suggestions ought to be sought
about your precise situations.
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