Board of directors

Scope

A joint-stock company, subject to the exceptions in the law, is managed and represented by the board of directors (Turkish Commercial Code (TTK) Art. 365). The board of directors consists of one or more persons appointed in the articles of association or elected by the general assembly (TTK Art. 359). Members are elected for a maximum of three years (TTK Art. 362). If the articles of association permit, management may be delegated by an internal directive, in whole or in part, to one or several members or to a third party (TTK Art. 367). However, duties such as the senior management of the company, determining the management organization, establishing the accounting and financial audit system, the senior supervision of the persons entrusted with management, and notifying the court in case of over-indebtedness cannot be delegated (TTK Art. 375).

Practical significance

Unless a stricter quorum is stipulated in the articles of association, the board of directors convenes with a majority of the total number of its members and takes decisions by a majority of those present at the meeting; members cannot vote as proxies for one another (TTK Art. 390). Unless the articles of association provide otherwise, the power of representation is exercised with two signatures; it may be delegated to one or more delegated members (murahhas üye) or to third parties as managers, but at least one member must hold the power of representation (TTK Art. 370). Members are obliged to perform their duties with the care of a prudent manager and to safeguard the interests of the company in accordance with the principle of good faith (TTK Art. 369); in case of culpable breach, liability toward the company, the shareholders and the creditors may arise (TTK Art. 553).

Commonly confused concepts

The board of directors should not be confused with the general assembly: the general assembly is the decision-making body of the shareholders and elects the members of the board of directors, grants them a release (ibra) and may remove them from office (TTK Art. 408). A limited liability company has no board of directors; management and representation belong to the manager or managers in accordance with the company agreement, and if there is more than one manager, a board of managers is formed (TTK Art. 623–624). The duties and powers of the boards of other legal entities, such as associations and cooperatives, are determined under their own legislation.