e-book2011

NEWSLETTER 2011

Innovations in the Board of Directors of Joint Stock

Companies

Prof. Dr. H. Ercüment Erdem

Provisions of the New Turkish Commercial Code (“New TCC”)

concerning the Board of Directors (“BoD”) are found among the

provisions that have been significantly modified. The corporate body that

is the most influenced by corporate governance rules within the scope

of the New TCC is the BoD. The BoD has been regulated through new

structural and functional provisions. Provisions aimed at guaranteeing

professional management and transparency were adopted. In addition,

the rules that will facilitate the operation of the BoD have been included

in the New TCC.

Formation of the Board of Directors

The first innovation set forth by the New TCC concerning the

formation of the BoD is the abrogation of the obligation of a minimum

of three directors regulated under the current Turkish Commercial Code

(“TCC”). In accordancewith the possibility of incorporation of corporation

sole, it is possible to form a BoD composed of only one director, pursuant

to Article 359/1 of the New TCC. Additionally, the condition of being a

Turkish citizen and having a place of residence in Turkey for at least one

of the directors was adopted. The obligation of being a shareholder for

the directors has been abolished.

The New TCC sets forth the condition of having a graduate degree

for at least one fourth of the directors in order to guarantee formation of

the BoD with more qualified members. On the other hand, this condition

will not apply to the BoDs which are composed of one director.

Another innovation set forth by the New TCC is the right of

representation for determined shares, shareholder groups, and minority

shareholders. In accordance with the new provisions, it is possible for

shareholder groups which have a preferential right in terms of profits,

Article of March 2011