Liability of the Members of the Board of Directors in Joint Stock Company

Structure of the Joint Stock Company and Members of the Board of Directors

Joint stock companies have a legal structure that covers companies of various sizes and characteristics. The board of directors usually acts as the highest-level governing body of the company and sets the strategic direction and financial policies of the company. Board members are generally accountable to a wide range of investors and shareholders and are held responsible for the long-term success of the company. Board members may be shareholders of the company or may be individuals who provide professional management services to the company under a contract.

Responsibilities of Board Members

1. Responsibility for Independent Decision Making: Board members should independently make decisions by putting the company’s interests first. This includes adopting the principle of impartiality and integrity in setting and guiding the company’s strategic objectives.
2. Investor Relations and Information Sharing: Board members should regularly share information about the company’s financial position, strategic goals, and performance. This is intended to strengthen the company’s relations with investors, shareholders, and other stakeholders and increase the transparency of the company.
3. Responsibility for Risk Management and Compliance: Board members should identify any potential risks that the company may face, and develop an effective risk management policy. They are also responsible for ensuring that the company complies with applicable legislation and ethical standards in the conduct of its business.
4. Legal and Financial Liability: The Turkish Commercial Code provides for legal and financial liabilities that may arise for board members while fulfilling their duties. Those responsibilities are introduced for protecting the interests of the company, being financially transparent, and respecting shareholders’ rights. It should also be noted that board members may also be liable for occupational accidents involving company employees.

Many theses and academic publications on this subject include detailed studies focusing on the responsibilities of board members. For example, there are many studies that examine in detail the legal liability of board members under the TCC, the nature, and characteristics of such liability, the differences between the former Turkish Commercial Code No. 6762 and the current Turkish Commercial Code No. 6102, and the liabilities of board members for public debts, particularly the liabilities under the Law No. 6183 on the Procedure of Collection of Public Receivables and the Tax Procedure Law No. 213. In addition, there are a good number of publications which addresses the liability lawsuit that can be filed against board members in cases where the liability is not fulfilled, and the characteristics of such lawsuit, and release, statute of limitations, consent of the injured party and settlement, which are the cases that eliminate the liability of board members. Academic studies on the subject serve as important resources for lawyers, academics, and business professionals, as they provide in-depth analysis of the legal liability of board members.

The liabilities of board members in joint stock companies are critical for the sustainability, transparency, and ethical values of the company. Fulfilling those liabilities within the framework set by the Turkish Commercial Code No. 6102 is an important element that affects both the success of the company and the trust of shareholders. In addition, this issue is also vitally important for start-ups for them to raise investments and achieve their long-term plans.

To fulfil those liabilities effectively, it is important that board members receive regular training and keep abreast of updates to the legislation. This is vital to ensure both the long-term success of the company and the credibility of the Turkish business community.

[1] For the full text of the Turkish Commercial Code No. 6102 click here.

For more information, please contact Att.Ardan Kaymaz here.