The joint stock company shall be managed and represented by the board of directors (TCC.365/1). The board of directors and the management in the area delegated to it are authorized to take decisions on all kinds of business and transactions necessary for the perform the company’s field of activity, except for those that are left to the authority of the general assembly pursuant to the law and the articles of association (TCC.374/1). A joint stock company has a board of directors consisting of one or more persons appointed by the articles of association or elected by the general assembly (TCC.359/1). In this article, we will discuss the issues regarding the term of the board members in practice.
1. How Many Years Can the Members of the Board of Directors of a Joint Stock Company Be Elected?
Members of the board of directors are elected for a maximum term of three years (TCC 362/1). They can be elected for one, two or three years. If they are elected for a term exceeding three years (e.g. four years), the part exceeding three years is invalid.
2. Can A Member Whose Term of Office Has Ended Be Re-Elected?
Unless otherwise stated in the articles of association, the same member can be re-elected (TCC.362/1).
3. In the event that the terms of office of the members of the Board of Directors end, does the title of Board Member automatically lose its validity?
According to the Court of Cassation, since there is no provision in the law stipulating that the members of the board of directors whose term of office ends shall automatically lose this title, it must be accepted that the board of directors shall continue their mandatory duties until the new board is elected. In this case, it cannot be stated that the company is automatically disorganized upon the end of the term of office of the members of the board of directors. (11th Court of Cassation, E. 2009/5463, K. 2009/6666, T. 1.6.2009, 10th Court of Cassation, E. 2015/17918, K. 2016/1198, T. 8.2.2016).
4. What are the Actions That Can Be Taken by the Members of the Board of Directors Whose Term of Office Has Ended?
It is important to note that the members of the board of directors whose term of office has ended may continue their duties for emergency situations until the new board of directors is elected. (Court of Cassation 11th HD, E. 2021/1446, K. 2022/5737, T. 12.09.2022).
“…although the term of office of the board of directors had ended at the time of the decision to appoint a representative for the general assembly of the defendant company, since the decision to appoint a representative is an urgent matter and it is accepted that the duty of the former board of directors will continue until the new board member is elected, the decision to appoint a representative should be accepted as valid…” (Court of Cassation 11th HD., E. 2012/12978, K. 2014/3622, T. 27.2.2014).
The necessary action to be taken is to ensure that the general assembly is called for a meeting to elect a new board of directors and to prevent the decision to dissolve the company pursuant to TCC 530.
5. Is the Three-Year Period Applicable for the Representatives of the State, Provincial Private Administrations, Municipalities, Villages and Other Public Legal Entities on the Boards of Directors of Joint Stock Companies?
The state, provincial private administrations, municipalities, villages and other public legal entities may be granted the right to have a representative on the boards of directors of joint stock companies whose field of activity is public service, even if they are not shareholders, by a provision to be stipulated in the articles of association. The representatives of public legal entities in the board of directors shall have the rights and duties of the members elected by the general assembly (TCC.334/1,3). Public legal entities determine the term of office of their representatives on the board of directors. They are not subject to a three-year term (TCC.362/2).