Legal and Criminal Liability of Board Members in Joint Stock Companies
Entrance
Joint-stock companies are one of the most important organizations in modern commercial life. They play a significant role in realizing large-scale capital investments, establishing broad ownership structures, and ensuring the sustainable conduct of economic activities.
The management of joint-stock companies the board of directors . The board of directors is the highest body that makes strategic decisions, represents the company, and manages its operations.
Therefore, while board members possess quite broad powers, they also bear significant responsibilities. The Turkish Commercial Code mandates that board members act with diligence and loyalty in fulfilling their duties
This article will comprehensively address the legal and criminal liability of board members in joint-stock companies , and the conditions under which this liability arises
The Concept of the Board of Directors
In joint-stock companies, the board of directors is the management and representation body of the company.
According to the Turkish Commercial Code, the board of directors:
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manages the company
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represents the company
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determines company policies
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monitors company activities
Board members may consist of individuals or legal entities.
When a legal entity becomes a member of the board of directors, a natural person representative is designated to act on behalf of the legal entity.
Duties of Board Members
The Turkish Commercial Code imposes certain non-transferable duties on the board of directors
These tasks include, in particular, the following:
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senior management of the company
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Determining the management organization
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establishment of accounting and financial system
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creation of a risk management system
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preparation of the annual activity report
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preparation of general assembly meetings
These tasks are the core functions of the board of directors and cannot be delegated to other individuals.
Board Members' Duty of Care and Loyalty
The Turkish Commercial Code imposes a duty of care and loyalty on board members
Accordingly, board members perform their duties as follows:
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to protect company interests
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acting in accordance with the rules of honesty
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to act like a prudent leader
It is necessary.
These obligations are important not only in terms of internal company relations but also in relation to third parties.
Legal Responsibility of Board Members
According to the Turkish Commercial Code, members of the board of directors are:
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to the law
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to the main contract
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general assembly decisions
They will be held responsible for any damages arising from their违规行为 (violations/misconduct).
For legal liability to arise, the following conditions must be met:
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an unlawful act
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mistake
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damage
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causal link
When these factors occur simultaneously, the board members become liable for compensation.
To whom does responsibility arise?
Board members may be accountable to three different groups:
Liability to the Company
Board members are primarily accountable to the company.
A lawsuit for damages to the company's assets can be filed against the board members .
Liability to Shareholders
Shareholders can also file liability lawsuits against board members in certain circumstances.
This type of lawsuit may arise, especially if shareholders have suffered direct losses.
Company Liability to Creditors
In some cases, company creditors may also file lawsuits against board members.
For example:
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unlawful reduction of the company's assets
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mismanagement of company assets
In such cases, creditors can claim compensation for their losses.
Joint and Several Liability of Board Members
If more than one board member has caused the damage, held jointly and severally .
In this case, the injured party can claim full compensation from any member of the board of directors.
A recourse relationship can then be established between the responsible parties based on their respective degrees of fault.
Criminal Liability of Board Members
Board members may also be held liable under criminal law in some cases.
For example:
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preparation of fraudulent financial reports
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misuse of company assets
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making false statements about capital
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fraudulent bankruptcy
Such situations can give rise to criminal liability.
Such actions are considered not only under commercial law but also criminal law .
Circumstances of Exemption from Responsibility
Board members may be relieved of liability in certain circumstances.
For example:
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having voted against the decision
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absence of defect
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the damage resulted from another cause
It can eliminate responsibility.
for members who voted against the decision to have this recorded in the meeting minutes .
Statute of Limitations in Liability Cases
According to the Turkish Commercial Code, the statute of limitations for liability lawsuits filed against board members is:
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2 years from the date the damage and the responsible party are identified.
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in any case, 5 years from the date the act occurred.
It has been organized as follows.
However, the statute of limitations for punishment may apply if the act also constitutes a crime.
Conclusion
In joint-stock companies, board members are endowed with broad powers, but these powers also bring with them significant responsibilities. Board members must act in accordance with the law, the articles of association, and the principles of good faith in fulfilling their duties.
Otherwise, the company may face compensation lawsuits filed by shareholders or creditors. In some cases, criminal liability may also arise.
Therefore, it is of great importance that board members in joint-stock companies act with prudence, care, and a management approach that prioritizes the company's interests .
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