The nullity of a board of directors' ("BoD") resolution has been set forth in Article 391 of Turkish Commercial Code ("TCC") numbered 6102. Under Article 391 of TCC, the conditions of requesting the nullity of BoDs resolution were mentioned but these reasons were not exhaustively listed. Therefore, the situations similar or parallel to the reasons listed can cause the nullity of the BoDs resolution. According to the given article, the main reasons of nullity of a BoDs resolution are (i) the resolutions contrary to principle of equal treatment, (ii) the resolutions which do not comply with the basic structure of joint stock company or do not maintain the principle of protecting the capital, (iii) the resolutions which violate the rights of shareholders which have especially indispensable nature or restrict or make these rights difficult to exercise, (iv) the resolutions within the non-delegable authorities of other bodies and relevant to the transfer of these authorities.

(i) Resolutions contrary to the principle of equal treatment:

BoD has duties and responsibilities to treat shareholders equally who are in equal status. The shareholder who  is harmed due to the resolution taken by BoD contrary to principle of equal treatment, can file a declaratory suit about the resolution which causes the damage. In this lawsuit, it should be demonstrated that the treatment between the shareholders in same status is different.

(ii) Resolutions which do not comply with the basic structure of joint stock company or do not maintain the principle of protecting the capital:

BoDs resolutions should be in compliance with the main structure of joint stock company. The main structure of a joint stock company relies on principles such as share capital, limited liability, liberty of transfer of shares, minimum nominal value etc. If the resolution taken by BoD does not comply with the principles given above or similar ones, shareholder can file an action for declaratory lawsuit for the nullity of BoD resolution.

(iii) Resolutions which violate the rights of shareholders which have especially indispensable nature or restrict or make these rights difficult to exercise:

The rights of participating to the general assembly, voting, filing action for nullity, filing action for responsibility etc. are the indispensable rights of a shareholder. If the BoD takes a resolution which violate the right given above, shareholder can file a declaratory lawsuit for the nullity of BoD resolution.

(iv) Resolutions within the non-delegable authorities of other bodies and relevant to the transfer of these authorities:

The creation of contradiction to the non-delegable authorities of bodies as mentioned in Articles 408/2 and 375 of TCC causes the nullity of BoD resolution. The shareholder can file a declaratory lawsuit for the nullity of BoD resolution according the reason given above.

(v) Other similar situations

The situation which causes the nullity of BoDs resolutions are not limited by the situations given in Article 391 of TCC. The contradiction to general provisions of TCC or other provisions of TCC as given in Articles 390/2-4-5, 484/2 can cause the nullity of BoDs resolutions.

  • In TCC, only the nullity of BoDs resolutions is mentioned, but the action for annulment against the BoDs resolutions has not set been forth. There are two exceptions of this situation in TCC. Firstly, in case of breaching conditions in Articles 134 to 190 by BoDs resolutions, the shareholders mentioned in article 192/1 can file action for annulment for BoDs resolutions. Secondly, if BoD has the authority to increase the capital until the ceiling for registered capital mentioned in articles of association with first or modified articles of association in a non-public joint stock company, shareholders and BoD members can take an action of annulment against the resolutions of BoD about increasing the capital as mentioned in article 460/5 of TCC.

As a result, differing from the general assembly resolutions, against the BoDs resolutions only the declaratory lawsuit can be filed. As stated in the grounds of mentioned legislation, the resolution of the board of directors cannot be cancelled. This means that the action for annulment has not been set forth in TCC for the BoDs resolutions. Only in the two situations mentioned above, the action for annulment can be filed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.