Duties and Liabilities of BOD members in Turkey
Liabilities of board members are governed by Turkish Commercial Law. In Turkey, directors of companies, including joint stock companies (A.Ş.) and limited liability companies (Ltd. Şti.), have certain legal duties and responsibilities outlined in the Turkish Commercial Code (TCC) and other relevant legislation. Failure to fulfill these duties can result in liabilities for BOD members. Here are the key liabilities of company directors in Turkey:
Fiduciary Duty
BOD members have a fiduciary duty to act in the best interests of the company and its shareholders. They must exercise due care, diligence, and loyalty in carrying out their responsibilities and making decisions on behalf of the company.
Duty of Care
BOD members are required to exercise the care and skill that a reasonably prudent person would use in similar circumstances. This includes staying informed about the company’s affairs, monitoring its operations, and making informed decisions based on available information.
Duty of Loyalty
BOD members must prioritize the interests of the company and its shareholders over their personal interests or the interests of other parties. They are prohibited from engaging in self-dealing, conflicts of interest, or actions that benefit them at the expense of the company.
Liability for Damages
BOD members may be held personally liable for damages resulting from breaches of their fiduciary duties, negligence, or wrongful acts. If a member’s actions or decisions cause financial harm to the company or its stakeholders, they may be required to compensate for the losses incurred.
Criminal Liability
In cases of serious misconduct or violations of the law, BOD members may face criminal charges and prosecution. Criminal offenses such as fraud, embezzlement, bribery, and insider trading can lead to imprisonment, fines, and other penalties.
Joint and Several Liability
In cases where multiple BOD members are involved in a breach of duty or wrongdoing, they may be held jointly and severally liable for the resulting damages. This means that each BOD member may be individually liable for the full amount of damages, regardless of their degree of involvement.
Indemnification and Insurance
Companies may indemnify BOD members against certain liabilities arising from their service on the board, subject to legal restrictions and conditions. Additionally, BOD members may be covered by directors and officers (D&O) liability insurance to mitigate personal financial risk.
Liabilites of board members should be considered carefully when doing business in Turkey. It’s essential for BOD members to understand their duties and obligations under Turkish law and to act with integrity, prudence, and accountability in fulfilling their roles. Seeking legal advice and guidance can help BOD members navigate their responsibilities and minimize the risk of liabilities. For yor questions and requests, feel free to contact us!
