The Turkish Commercial Code (“the TCC”) numbered 6762 which has formed the commercial life for over 50 years will eventually be replaced with the New Turkish Commercial Code (“the New Code”) as of July 1, 2012.
In this study, the provisions of the New Code as to the board of directors (“BoD”) in joint stock companies will be examined.
Structure of the BoD
Pursuant to the New Code, the BoD can be composed of only one director and this director is not required to be a shareholder as expressly defined in Art. 359/1 of the New Code. Furthermore, on contrary to the currently existing system, the way for legal entities to be able to become a member of the BoD has been paved.
It is obligatory that at least one member of the BoD authorized to represent the company shall be a Turkish citizen residing in Turkey (Art. 359/1 of the New Code). In case the BoD is consisted of one member, it will be mandatory for this member to be a Turkish citizen and resident in Turkey.
With the aim of increasing the number of professional board members, the New Code provides that at least one-quarter of the BoD members shall have graduate degrees from universities. However, this requirement is not stipulated for the BoD consisting of one member.
The New Code also enables specific share groups to be represented in the BoD.
The new Code prescribes the nonassignable and indefeasible authorities of the BoD under Article 375 as numerus clauses, the most significant of those are as follows: (1) determination of the company management organization; (2) keeping the share, BoD resolution, general assembly meeting and discussion books, (3) issuing the annual activity report and corporate governance declaration and submitting them to the general assembly, (4) preparation of the general assembly meetings and execution of the general assembly resolutions; (5) notifying the court in case of being deeply in debt.
One of the most significant amendments within the New Code is the opportunity of the BoD meetings to be held in electronic environment. Provided that there is a regulation on this matter in the articles of association, the BoD will be able to take online resolutions.
Decision-making Process and Other Issues
Reducing the meeting quorum, the New Code provides that in BoDs with more than one member, unless a more aggravated quorum is determined, the BoD will be able to meet with the majority of its members.
The New Code adopts the “voluntary insurance” as the assurance of the damage the BoD member may cause while performing his duties.
Eventually, even though the BoD decisions are not irrevocable, it will be possible with the New Code to request a court determination regarding that the BoD decision is null and void. The action for determination of invalidity or nonexistence of a BoD decision is filed by legitimate stakeholders against the Company.