Turkey: Board Of Directors Of A Joint Stock Company In The Light Of Draft Turkish Commercial Code

Last Updated: 24 August 2009
Article by Nilay Celebi

The Board of Directors ("BoD") of a joint stock company has been one of the most significant areas in the commercial environment. In my view, the reason for such significance could be due to the fact that, the BoD is the representation and administration body of a joint stock company among third parties or another reason for such significance could be on the basis that majority of the shareholders desire to manage the company and in doing so they would like to elect their own directors.

For the abovementioned reasons I would like to draw attention to the "Board of Directors of a Joint Stock Company" under the draft Turkish Commercial Code ("Draft TCC") by comparing it to the Turkish Commercial Code ("Current TCC").

The Current TCC was adopted in 1956 and took into consideration Swiss and German Law. An overall effort to harmonize the Current TCC to Turkey's economic, legal and technological growth and development has been in progress over the previous years. The Draft TCC has been accepted in the Parliament and currently approximately the first eighty (80) articles have been accepted.

The Draft TCC regulates commercial relations with respect to commercial, technological, legal, doctrinal developments in addition with common practice. The Capital Markets Board Corporate Governance Code ("CMB Corporate Governance Code") and some significant court of appeal decisions are also reflected in the Draft TCC.

Board of Directors

Article 312 of the Current TCC states that; the Board of Directors ("BoD")1 consist of at least three (3) members all of whom must be shareholders. In addition to that the BoD members must be real persons.

Article 359 of the Draft TCC states that; the BoD may consist of one or more members. In other words, the BoD is no longer required to consist of at least three (3) members. Please note that with this article, a BoD member can also be a legal entity. In case of a selection of a legal entity as a BoD member, the real person appointed by the legal entity as well as the legal entity shall be registered and announced in Turkish Trade Registry Gazette. Accordingly, such selection shall be announced on the web site of the company2. Please also note that, only such registered persons shall vote on behalf of the legal entity.

Another major change proposed by the Draft TCC concerning the directors is that they no longer have to be shareholders.

In case there is more than one director, at least one director must be Turkish and be resident in Turkey. In this Article, we can see the reflection of CMB Corporate Governance Code, which requires at least one of four directors to have a high level of education.


In practice, Article 318 of the Current TCC has been interpreted to allow for only one vice chairman (particularly the Trade Registry offices have been interpreting such Article).

Article 366 of the Draft TCC now clarifies this interpretation and states that the BoD can elect more than one vice chairman among its members. It may also be determined under the AoA for any chairman and vice chairman to be elected by the GA.

The Draft TCC also proposes and encourages the professional administrative. As a consequence, the concept of "executive- non executive director" is introduced with the Draft TCC (such is reflected in the CMB Corporate Governance Code).

In line with Article 367 of the Draft TCC, the administrative and representative duties can be transferred to any BoD member or a third person provided that such transfer is determined by the AoA. In such a case the BoD shall prepare an "internal regulation" determining the administrative duties and their definitions.


Pursuant to Article 321 of the Current TCC; the transactions of a joint stock company shall be within the scope and aim of the company as determined under the AoA ("ultra vires" rule). The transactions beyond the scope or aim of the company shall be null and void. There are several court of appeal decisions on such issue.

Nevertheless, the ultra vires rule has been eliminated with Article 125 and 371 of the Draft TCC. Even tough the objects are silent in the AoA then all transactions beyond the scope and aim of the company shall be binding on the company (annulment of ultra vires rule).


According to Article 330 of the Current TCC; the presence of one half of the directors plus one is required for passing a resolution and the resolutions shall be taken by the majority of the directors present at the meeting. The majority under this article has been interpreted differently under the doctrine and court of appeal decisions. i.e. "in case there are three (3) members; since there cannot be 1,5 members it shall be interpreted as two (2) members, the majority than will be three (3) (one half of the directors plus one) which is all of the members.

However Article 390 of the Draft TCC stipulates that; the BoD can convene with the majority of the BoD members. (i.e. if there are three (3) members, the majority then will be two (2) members). The quorum of the resolutions of the BoD is also the majority of the participants.

Furthermore, the BoD meetings can be concluded in an electronic environment and the resolutions can be adopted thereto. The Draft TCC also introduces the concept of taking the signatures of the BoD members in different pages. According to the Current TCC, the participant BoD members should sign the resolution in any manner whatsoever. Even though it is not clear in the Draft TCC as for the Turkish doctrine, the signatures of the BoD members can be taken on different pages of the same resolution. It is my view that this article will make it easier to pass a resolution when the BoD members are in different cities/countries.

Void and Null Resolutions

Article 391 of the Draft TCC is to clarify the BoD resolutions which are void and null (i) resolutions contrary to the equality rule; (ii) resolutions contrary to the company or the securing capital rule; (iii) resolutions contrary to the shareholders rights and which limit the utilization of such rights; and (iv) resolutions which are inalienable duties of other organs. Please note that, such circumstances are not -numerous clauses-.

Limitation of the Liberty of Action

According to Article 395 of the Draft TCC, no loans shall be provided by the company to the director's or loans to other companies where the director or any of its relatives hold at least 20% of the shares of such company or to sole proprietorships owned by such director or his relatives. In such a case, the BoD members can be held liable by the creditors of the company for the amount of the debt. Please be aware that the Draft TCC, reserves the provisions of the Banking Code.

Responsibilities of Directors

According to the Turkish doctrine, there is a representation relationship between the BoD members and the company in light of Turkish Code of Obligations Law No. 818. As a consequence, the BoD members acting in light of the representation relationship may be held liable unless they can prove that they are not in fault.

Pursuant to Article 336 of the Current TCC, the BoD members are jointly and severally responsible to the company as well as the shareholders and creditors with their actions in the following circumstances; (i) if the payments distributed to the shareholders on account of the value of shares are not exact, (ii) if the dividends distributed and paid are fictitious; (iii) if the books to be kept in accordance with the law are non existent or kept irregularly; (iv) if the resolutions of the GA are not executed with no reason; (v) if the other duties in accordance with the law or AoA are not fulfilled intentionally or in negligence. In such circumstances the BoD members shall be personally responsible for their actions.

Article 553 and 557 of the Draft TCC; addresses the responsibilities of the BoD members. According to Article 553 of the Draft TCC; directors entrusted with the management may be held liable to the company as well as the shareholders and creditors for damages caused by violation of their duties arising from the laws and the AoA unless they can prove that they are not in fault. This liability extends to damages caused by those to whom managerial responsibility has been delegated, unless it can be shown that the designation, instruction and supervision has been carried out with due care.

Notwithstanding the lack of advocates, the Turkish doctrine and the Current TCC accept absolute solidarity. The company as well as the shareholders and the creditors may make a claim for losses from one or all of the members (absolute solidarity). However, Article 557 of the Draft TCC proposes a different system of solidarity which eliminates absolute solidarity and introduces "differentiated solidarity". The responsibility of a BoD member shall be determined according to its actions and with the causal connection. Accordingly a BoD member who is not connected with the circumstance of a loss of the company (shareholders and the creditor) shall not be held liable and the BoD member who acts negligently shall be held liable only in proportion with its part.


1. BoD members shall also be referred to as "directors" in the article.

2. Pursuant to the Draft TCC joint stock companies are obliged to set up websites.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement

    Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of www.mondaq.com

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at enquiries@mondaq.com.

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions