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members of the board of directors for the first time in Turkish Law. The
enacted article prohibits board members from being indebted to the
company in cash or any other non-cash benefit. The Amendment Act,
in line with the amendment to the prohibition on loans to shareholders
by the company, minimizes the scope of this prohibition. Below, the
prohibition on borrowing of board members from the company prior to
the amendment shall be analyzed and then the amendment introduced
by the Amendment Act shall be assessed.
The System Introduced by the New TCC
With a provision similar to the provision governing prohibition
imposed on shareholders to borrow from their company, the New TCC
prohibits board members; persons within lineal kinship to the board
members, spouses and relatives to third degree (third degree included) of
the board members, the private unlimited companies of those in which
they are partners and corporations in which they hold at least twenty per-
cent of the share capital of a company to borrow from the company. The
scope of the prohibition with respect to persons concerned is very broad.
These persons may not borrow from the company in cash or get any non-
cash benefit, moreover, the company may not provide any surety, guar-
antee, and collateral for these people; assume any obligations or their
debts for such persons. The article regulates one exception to the prohi-
bition stating that companies which are member of a group of companies
may become sureties or guarantors for one another.
There is a double punishment foreseen for the violation of this pro-
hibition. In the event the persons mentioned in the article borrows from
the company (or the company assumed any of the obligations stated
above) in violation of the prohibition, the creditors of the company
may initiate proceedings against these persons -for the lent amount.
Furthermore, persons, who violate this rule by borrowing from the
company, shall be faced with a judicial monetary sanction of at least
three hundred days.
The Amendment Introduced by the Amendment Act
The Amendment Act narrows the scope of prohibition with respect
to the related persons. The prohibition shall not be applicable to the
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