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Expiration of Term of Office of the Board of Directors in
Joint Stock Companies
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The term of office of the board of directors in joint stock companies
is limited to three years in article 314 of the Turkish Commercial Code
(hereinafter referred to as the “TCC”) titled “Term”. This term may be
shortened by the articles of association and additionally, the terms of office
of board members may be determined by the general assembly.
It is discussed whether the duties of former board members continue or
whether the situation of a lack of organs arises in the joint stock company
according to art. 435 of TCC if new board members cannot be elected in
the general assembly held to elect new board members in lieu of the former
ones or if an election does not take place since the general assembly cannot
be held.
If new board members are not elected even though the terms of the
current members have expired in accordance with the Code limitation of
three years, there is no provision in the TCC regarding whether the duties
and competences of the members of the board of directors whose terms
have expired will continue. This issue has been discussed in the doctrine
and in court decisions. It is also possible to see controversial decisions by
the Court of Appeals.
For example, decision numbered 1981/4751-1981/5019 and dated
24.11.1981 of the 11
th
Chamber of the Court of Appeals pointed to the
risks associated with continuing the powers of board members whose
terms have expired:
“
It is possible to accept that the duties of board members
may continue until the new members are elected at least
as to existing services and works. But this method also
has some disadvantages. To accept that the competences
of former board members continue as they were before
means giving indirectly the competences to persons that
the general assembly did not elect and did not give any
competence. This would be against the will and demands
of shareholders. What will be the term of this duty? The
term of office of board members who were elected for
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Article of December 2010