Contact: Att. Revan Sunol; Erdem & Erdem (Turkey)
Introduction
Pursuant to Turkish Commercial Law No. 6762, legal entities could not be elected to serve as a member of the board of directors in a joint stock company. Instead, representatives appointed by the legal entity were appointed as member. However, pursuant to the Turkish Commercial Code ("TCC") No. 6102, legal entities may be appointed to membership on the board of directors and shall be represented by a real person of their choosing. Whereas the Tax Procedural Code ("TPC") No. 3475, the TCC and the Procedures of Collection of Public Assets Code ("PCPAC") No. 6138 regulate the liability of the board of directors as the legal representative body of the company in relation to tax debts and their other obligations; there are no provisions for the liability of a legal entity board member's representative.
Legal Entity as a Member of the Board
As mentioned above, according to Art. 359 TCC, the member of the board of directors shall be the legal entity itself and not its representative. Thus, rights and duties that result from being on the board of directors, such as access to information, taking part in negotiations for the adoption of resolutions and voting rights, are executed by the representative appointed by the legal entity. The board member legal entity may only appoint one representative and the representative must be registered with the trade registry and identified on the company website (the company for which the legal entity serves as board of directors member).
Liability of Board Members
The legal liability of the board of directors, as regulated within the TCC, is fault based and may result from non-compliance with the obligations arising from the law or the articles of association of the relevant company, as per Art. 553; non-compliance of the representations and documents with the law, as per Art. 549; misleading declarations regarding the share capital or knowledge of insolvency, as per Art. 550; or from value evaluation, as per Art. 551.
