Turkish Commercial Code No. 6102 (the “TCC” or the “Code”) establishes a fault-based liability regime for members of the board of directors. Pursuant to Article 553(1) of the TCC, board members who culpably breach their obligations arising from the law or the articles of association are liable for the resulting loss or damage caused to the company, its shareholders, and its creditors. The case law of the Court of Cassation has established, as a general principle, that board members will be held liable where both the loss or damage and their fault in connection with the relevant acts or transactions are proven.1 While the Code permits the delegation of management and representation authority, it imposes limitations on the delegation of certain duties and authority. In this article, we will illustrate, through practical examples, the matters to which board members should pay particular attention in order to avoid fault and, consequently, liability under this fault-based liability regime.
1. Supervision Duty and Duty of Care
Article 369 of the TCC requires members of the board of directors and third parties entrusted with management to perform their duties with the care of a prudent manager. In other words, it establishes a general standard of conduct governing how managers are expected to perform their duties. Remaining passive and thereby neglecting this supervisory duty does not relieve board members of liability; likewise, tolerating transactions that are detrimental to the company may also give rise to liability.2
Article 375/1-e of the TCC, by contrast, provides for a distinct and more specific duty: the supervision of whether persons entrusted with management act in compliance with the law, the articles of association, internal directives, and the written instructions of the board of directors. This duty is expressly listed among the non-delegable and inalienable duties and authorities of the board of directors.
In legal doctrine, the question of which standard applies in the performance of the supervision duty is considered in connection with the duty of care under Article 369 of the TCC. Although these two duties are closely related, they do not serve the same function. The duty of care constitutes a standard of conduct, whereas the supervision duty under Article 375 of the TCC constitutes a specific, non-delegable duty entrusted to the board of directors as a corporate body. For example, if B and C effectively leave the management of the company to A and refrain from any involvement, this does not exempt them from the liability regime prescribed by the TCC.
2. Can Management and Representation Authority Be Delegated?
a. Delegation of Management Authority
Under Article 367 of the TCC, management may be delegated, in whole or in part, to one or more board members or to third parties, provided that the articles of association contain a provision permitting such delegation and that the board of directors adopts an internal directive.
Even in areas where management authority has been delegated, the board of directors remains responsible for ensuring that the organizational structure is properly established and for monitoring whether the persons to whom such authority has been delegated duly perform their duties.3
b. Delegation of Representation Authority
Unless otherwise provided in the articles of association, representation authority rests with the board of directors. Under Article 370 of the TCC, such authority may be delegated to one or more managing directors or to third parties acting as managers. This constitutes a form of delegation of representation authority in the technical sense.
Article 371(7) of the TCC further permits board members who do not have representation authority, as well as persons employed by the company under an employment contract, to be appointed as commercial agents with limited authority or as other commercial assistants. The scope of their authority is set out in the internal directive and is registered with the trade registry and announced. In such cases, it should be noted that the joint and several liability of the board members continues to apply.
3. Does Delegation of Authority Relieve the Board of Directors of Liability?
The Court of Cassation has adopted a clear position on this matter: the fact that board members were appointed merely “for appearances’ sake” or acted on the instructions of others does not relieve them of liability.4
The delegating person is relieved of liability only to the extent that they can demonstrate that they exercised reasonable care in selecting the person to whom authority was delegated and that the circumstances in question genuinely developed beyond their control. Importantly, it must also be demonstrated that the supervision duty under Article 375/1-e of the TCC, as discussed above, has been duly performed. In addition, under Article 557 of the TCC, where more than one person is liable to compensate for the same loss, each is jointly and severally liable to the extent attributable to their fault and the circumstances of the case. In the absence of a legally valid allocation of duties, a defense based merely on the assertion that “I am not responsible” is insufficient.5
Accordingly, the assessment of liability also takes into account whether the relevant duty was duly delegated and whether the board of directors properly discharged its organizational and supervisory duties. For example, where a person is designated as responsible for occupational health and safety, the assessment will consider whether that person possesses the qualifications necessary to assume such responsibility, whether they have been allocated an adequate budget, and whether they have the authority to make decisions independently without having to obtain further instructions.
4. What Does the Supervision Duty Mean in Practice?
The supervision duty does not require the board of directors to be involved in the company’s day-to-day operations or to review every transaction individually. Rather, the board is expected to establish an organizational structure appropriate to the company’s activities and risk profile, determine who is responsible for monitoring material legal and financial risks, and establish an information flow that ensures such risks are brought to the board’s attention when necessary. It is important not only that such a system be established, but also that it function effectively when a risk or suspected breach arises.
In its decision6, the Criminal General Assembly of the Court of Cassation emphasized that the supervision duty under Article 375 of the TCC is non-delegable, while also drawing attention to the limits of such liability under Articles 553(2) and 553(3) of the TCC. Day-to-day matters may be entrusted to qualified and competent persons, and board members may not be held liable for unlawful conduct beyond their control solely on the basis of their supervision duty. However, in the case at hand, the Court of Cassation found that the board member was aware of the ongoing unlawful conduct and, despite having the opportunity to intervene, failed to give the necessary instructions, and accordingly held the board member criminally liable. In short, remaining passive does not constitute a ground for avoiding liability; on the contrary, it constitutes a culpable breach of the duties of care and supervision.7
The supervision duty of the board of directors is not confined to a single area of law; it may arise in a wide range of fields, from occupational health and safety to personal data protection, from tax legislation to environmental law, and from competition law to other areas that impose compliance obligations. For example, where a company is subject to an administrative fine following an investigation by the Turkish Competition Authority, and the infringement is found to have resulted from deficiencies in supervision—such as a failure to provide employees with competition law training, to review agreements for compliance with competition law, or to assess the applicable legislation at all—the board of directors may be found to have breached its supervision duty. One of the sources under which the supervision duty and managerial liability are specifically regulated and made subject to sanctions is the Regulation on Administrative Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition and Abuses of Dominant Position (“the New Regulation on Administrative Fines”)8. Under these rules, where a manager is found to have had a decisive influence on the infringement, an administrative fine of up to five percent of the fine imposed on the company may also be imposed on that manager. In our view, it is important that such decisive influence be assessed together with the overall supervision duty.
In its decision dated 6 November 2025 and numbered 25-41/1016-5829, the Turkish Competition Board imposed an administrative fine of TRY 5 million personally on the company manager who had played a decisive role in the infringement. The decision clearly demonstrates that, in companies with a sole shareholder and a sole manager, the manager’s “decisive influence” over the company was considered sufficient to impose an individual administrative fine.
In short, the supervision duty does not require the board of directors to be directly involved in every transaction of the company. Rather, it requires the board to establish organizational, information-flow, and control mechanisms that enable the timely identification of material legal and operational risks, and to take appropriate action in response to serious risks or unlawful conduct.
5. How Can the Board of Directors Mitigate Liability Risk?
There is no mechanism that can entirely eliminate the liability of the board of directors. However, supporting the exercise of the requisite degree of care with concrete evidence can significantly ease the evidentiary burden in the event of a dispute. Accordingly, particular attention should be paid to the following:
· The allocation of duties and authority should be set out in a written and up-to-date internal directive, clearly specifying who is responsible for each matter, to whom each person reports, and what information must be reported and to whom.
· Documentable care should be exercised in selecting persons to whom authority will be delegated, including an assessment of their qualifications, past performance, and any potential conflicts of interest.
· Internal control and compliance mechanisms appropriate to the company’s risk profile should be established, with responsible persons designated in particular for areas such as competition law, occupational health and safety, and personal data protection.
· A clear information flow should be established to ensure regular reporting to the board of directors, as well as immediate reporting of critical or high-risk matters.
· Board decisions, supervision activities, and measures taken should be documented in writing. The minutes of board meetings should also record the risks discussed and the information presented to the board.
· Agreements entered into by the company should be duly reviewed.
· Appropriate internal agreements between the company and board members aimed at allocating and limiting liability should be put in place.
· Board members should attend all board meetings and, where they consider a matter under consideration to be inappropriate or objectionable, should vote against it or abstain, as appropriate.
The purpose of these practices is to ensure that the board of directors assumes an active, rather than passive, supervisory role. It is not sufficient for such a system merely to exist on paper; what matters is that it operates effectively in practice.
6. Conclusion
The supervision duty should not be understood as an unlimited duty of control requiring the board of directors to personally supervise every transaction and activity of the company. Article 553(3) of the TCC specifically refers to the concept of “control.” Rather, the board is expected to establish a supervisory framework appropriate to the nature of the company’s activities and its risk profile, and to take the necessary measures in response to material risks or unlawful conduct. The effectiveness of supervision is measured not merely by the existence of policies and procedures, but also by whether the board evaluates the information brought to its attention, establishes mechanisms for monitoring compliance with applicable laws and regulations, requests additional information where necessary, and follows up on actions taken to address identified risks.
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.
