June 30, 2022

jdean-law

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Liabilities Of The Board Members In A Joint Stock Company - Corporate/Commercial Law

Liabilities Of The Board Members In A Joint Stock Company – Corporate/Commercial Law


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A. INTRODUCTION

Management and representation of joint stock providers are&#13
carried out by the board of administrators. For this reason, the board of&#13
administrators is deemed as one of most important organs of joint&#13
inventory firms obtaining broadest illustration powers. In this&#13
context, the enterprise is managed and represented by the board of&#13
administrators for the daily life of a joint stock organization.

The board users have specific liabilities arising out of&#13
general performance of their   obligations of administration and&#13
illustration of the enterprise. . In situation of violation of these&#13
obligations with fault, pursuant to the provision of Turkish&#13
Industrial Code No. 6102 (“TCC”) Posting 553/1 the&#13
board users could be held liable for the damages they lead to to the&#13
organization, the shareholders and the  lenders of the&#13
corporation.

B. Standard OBLIGATIONS ARISING FROM Law

The board customers are subject matter to the obligations established forth in&#13
the TCC, on their election to the board of administrators. In addition&#13
to the obligations in the TCC, it is doable to impose other&#13
obligations on them through article content of affiliation of the company.&#13
This short article will only contact upon some of the normal obligations&#13
of the board arising out of the TCC and the regular of treatment that&#13
should really be exercised by the board associates. We would like to not that&#13
there are other obligations imposed by the  pursuant to the&#13
exclusive provisions of the TCC or current market distinct rules and&#13
polices which could be applicable based on the exercise regions&#13
of the company.

Senior Management and Supervision of the Business

Since the board of administrators is the government physique of the&#13
enterprise, the board users are liable for taking part in the&#13
management selections of the firm and supervising the&#13
implementation of these selections. This obligation does not prolong&#13
to an interpretation to mean selections about all varieties of&#13
operations of the enterprise in each single depth are supplied or&#13
supervised strictly by the board of administrators. As a issue of fact,&#13
with the phrase “senior management” in the that means of TCC&#13
375/1/a and the phrase “senior supervision” in the&#13
indicating of TCC 375/1/e provides an plan about the extent of&#13
involvement by the board of administrators in administration and&#13
oversight.

Not Moving into into Transaction with the Firm and Not&#13
Borrowing from the Organization

Pursuant to TCC 395/1, the board members cannot enter into a&#13
transaction with the firm on behalf of on their own or everyone else&#13
without the need of obtaining authorization from the general assembly normally,&#13
the enterprise may declare that the transaction is invalid. On the other&#13
hand, the aforementioned board member assert that the transaction is&#13
invalid.

In accordance to the second paragraph of the similar posting, the board&#13
customers aside from shareholders are prohibited from borrowing funds&#13
from the firm. Similarly, it is clearly regulated that the&#13
business can not supply surety, assurance and assurance for&#13
non-shareholder board associates and are not able to consider more than the money owed of&#13
these board associates. In case of a breach of this obligation, the&#13
TCC allows the lenders of the company to straight start out financial debt&#13
enforcement proceedings from the appropriate board users&#13
pertaining to the respective quantities owed to the enterprise.

Non-contend with the Firm

Pursuant to the Report 396/1 of the TCC, the board members are&#13
prohibited from instantly or indirectly carrying out the commercial&#13
affairs that slide inside the scope of the firm’s area of&#13
procedure. Board customers could carry out the aforementioned&#13
transactions in accordance with the regulation only with the authorization of&#13
the basic assembly or in case the place the content articles of association&#13
of the business supplies for this kind of provision enabling the board&#13
customers to contend with the corporation . Without having the permission of the&#13
typical assembly, the board member who carries out industrial&#13
affairs in the scope of the firm’s discipline of operation,&#13
will breach this obligation.

Duty of Treatment and Obligation of Loyalty

Pursuant to Short article 369/1 of the TCC, the board associates are&#13
obliged to fulfill their obligations with the care of a prudent manager&#13
and to safeguard the pursuits of the business. Board associates are&#13
obliged to comply with this obligation of care, equally when fulfilling&#13
their obligations arising out of the law or the articles or blog posts of&#13
association and for the duration of the management and illustration of the&#13
firm. According to the rationale of Short article 369 of the TCC, a&#13
“prudent manager” talked about in the Code ought to be&#13
regarded as in the context of “small business judgment&#13
rule
” which term found its roots from the US commercial&#13
law. In this context, merely the actuality that a final decision of the board&#13
of directors turns out to be unfavorable to the firm, does not&#13
give increase to the legal responsibility of the board of directors. If the board&#13
members can demonstrate that they exercised due care envisioned from&#13
a prudent company person, and gave a selection on entirely-informed&#13
foundation, acquiring the expected specialized, fiscal and legal advice&#13
and acted for the greatest pursuits of the enterprise in their impression&#13
even if the end result of the selection is against the compan’s&#13
added benefits , such a judgment are unable to be viewed as as violation of the&#13
responsibility of treatment. Nevertheless, it really should be highlighted that the organization&#13
judgment rule is a basic principle that is overseas to Turkish Legislation, as it&#13
was derived from the Typical Regulation process. Accordingly,the higher court&#13
judgments are predicted to shape application of this rule.

Posting 369/1 of the TCC also regulates the obligation of&#13
loyalty. This obligation is imposed by the next part of such&#13
short article: “to safeguard the interests of the firm in&#13
accordance with the rule of honesty
”. The board associates&#13
are obliged to prioritize the interests of the company and to stay away from&#13
actions that might harm the corporation although executing the management&#13
and illustration of the company. In addition, the board associates&#13
have obligations of confidentiality arising from their loyalty&#13
obligations.

C. BREACH OF OBLIGATIONS AND Legal responsibility

If the board members violate their obligations arising from the&#13
law or the posts of association with fault and the firm, the&#13
shareholders or the lenders put up with destruction because of to this violation,&#13
the board customers with fault are held liable. If the harm of the&#13
firm has transpired, the company or each and every shareholder has the&#13
authority to file an action for compensation. In this scenario, the&#13
courtroom will make a decision on the quantity of the compensation entitled by the&#13
organization. If the damage is caused specifically to the suitable&#13
shareholder or creditor, the shareholde or creditors has the&#13
authority to demand that the compensation be paid out right to him.&#13
If additional than one board associates are dependable for the damage, the&#13
responsibilities of these board members are established pro-rata to&#13
their respective faults resulting in the damage.

The motion for lawful legal responsibility towards the board customers, need to&#13
be filed just before the Business Courts of 1st Occasion where by the&#13
principal area of business enterprise of the organization is found. The statute&#13
of limitations for this motion is regulated in Write-up 560 of the&#13
TCC as follows:

“The right to declare payment from those responsible&#13
will become barred by prescription immediately after two many years from the day when&#13
the plaintiff uncovered the injury and the responsibles, and in any&#13
case 5 yrs from the date of occurrence of  the act that&#13
triggered the hurt. In so significantly, if this act necessitates a penalty in&#13
the which means of felony regulation and is subject to a for a longer time statute of&#13
limitations concerning Turkish Penal Code, this statute of&#13
restrictions shall apply to the compensation circumstance.”

D. Summary

In scenario the board users of the enterprise violate their&#13
obligations arising from the legislation and the articles of affiliation,&#13
they are liable for the payment of the damages of the&#13
corporation, shareholders or creditors because of to this violation. No matter whether a&#13
fault is attributable to the board users ought to be established&#13
according to the “business judgment rule” imported from&#13
the prevalent law process to Turkish Law.

Originally Published 16 February 2022

The content of this article is meant to deliver a standard&#13
information to the subject matter matter. Professional guidance need to be sought&#13
about your particular instances.



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