THE BOARD OF DIRECTORS MEMBERSHIP
Following the entry into force of the Turkish Commercial Code (“TCC”) numbered 6102 on 1 July 2012, there have been significant amendments regarding the Board of Directors (“BoD”), which is the management and representative organ of joint stock companies.
Becoming a BoD member has been considerably simplified as you may see herebelow:
- The most significant amendment regarding the BoD of joint stock companies is that the BoD may consist of only one member.The member(s) shall be assigned by the Company’s Articles of Association (“AoA”) or by a resolution of the General Assembly for a maximum period of three (3) years. The same person may be selected as a BoD member again after the termination of this period; unless otherwise provided in the AoA.
- According to the Previous Turkish Commercial Code numbered 6762 (“PTCC”), it was necessary to be a shareholder in order to become a member of the BoD. However, the TCC sets forth that non- shareholders may also become members of the BoD, unless otherwise provided in the AoA.
- According to the PTCC, only real persons were allowed to be assigned as members of the BoD; whereas legal entities could only be represented by one (or more) real person(s), who is (are) assigned to be a member of the BoD as the “representative” of the relevant legal entity.The TCC has entitled legal entities to become a member of the BoD by appointing only one real person to participate in the meetings and vote on behalf of the relevant legal entity, who shall be registered and published together with the legal entity Board member.
- The Article 359 of the TCC sets forth the necessary qualifications required to become a member of the BoD. Members of the BoD and the real persons appointed to represent a legal entity BoD member shall be sui juris.Three conditions are needed for an individual in order to be considered sui juris; (i) Mental capacity, (ii) Age of majority and, (iii) Not being under legal disability (as per the restrictions provided by the Turkish Civil Law restrictions).
All members of the BoD can be formed as foreigners according to the provisions of TCC.
A reason for the termination of membership also prevents election as a BoD member. This would be the case in the event that a BoD member loses any of the necessary qualifications foreseen in the TCC or the AoA.
There are also some special laws other than the TCC that provide particular provisions for BoD membership. For instance, according to the Banking Law, BoD members shall have the qualifications stated in the management provisions and it also requires professional experience to carry out the planned activities. Similarly, the Insurance Law requires BoD members to have the qualifications foreseen for insurance or reassurance company founders.
The Capital Market Board is entitled to publish communiqués, which are binding for listed companies. There are also provisions, such as independent board membership, provided in the said communiqués.
Finally, additional qualifications may be required by the AoA of the Company for BoD members, provided that such provisions are in compliance with the compulsory rules of laws. Since the law does not include any provisions to require BoD members to be literate, the AoA may stipulate a certain level of education, an age limit, a specific nationality or a particular profession depending of the activity.
Our Law Firm remains at your disposal for any further questions.