98 NEWSLETTER 2021 and experiences. Accordingly, the PMC determines the risk preferences and requirements of the client before starting with the portfolio management. According to the risk preference, the portfolio manager shall put their best efforts forward to maximize the profitability of the client. Under Article 42 (Framework Agreement for Individual Portfolio Management) of Communiqué numbered III-37.1, a written framework agreement that contains the essential provisions determined by the Board shall be executed. Liability of Portfolio Management In cases where there is no provision in the CML, the relevant legislation, and the fund internal regulation, the provisions regarding the contract of mandate in Turkish Code of Obligations numbered 6098 shall be applied by analogy to the relations between the PMC and the savers. Moreover, pursuant to Article 55/6 of the CML, the PMCs are obliged to protect the interests of the funds under their management, the savers, and other customers, while carrying out their activities. Similarly, pursuant to Article 21 (Principle of Professional Care and Diligence) of Communiqué numbered III-55.1, the managers and the employees of the PMC must show the necessary professional care and diligence in their work and decision-making. Care and diligence express the importance, attention, and effort that a careful and prudent person will give to the details under the same conditions. However, under Article 41 (Principles and Rules on the Activity of Individual Portfolio Management) of Communiqué numbered III-37.1, it is explicitly prohibited for PMCs to guarantee any income. Pursuant to Article 34 (Portfolio Management Agreement) of Communiqué numbered III-55.1, the PMC is directly liable to the client for all of the transactions that breach the contract, internal statute, prospectus, articles of association, capital market legislation and general provisions, and those which have been carried out by the portfolio managers specified in the agreement, as well as any damages they may inflict on their clients due to their acts that are contrary to the duty of care and loyalty. No contrary provision may be regulated in the portfolio management agreement.
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