What kind of Actions should be Taken When All of the Members of the Board of Directors of a Joint Stock Company Resign or the Quorum Determined in the Articles of Association cannot be Complied? 29 June 2017
a. Resignation of Member of Board of Directors
Resignation of a board member is one of the reasons that cease the membership of board of directors as well as dismissal of the member or expiration of term of office. The Turkish Commercial Code numbered 6102 (“TCC”) does not expressly regulate the resignation of the board members. However, it is accepted that it is possible for a board member to resign based on the provisions of Turkish Code of Obligations numbered 6098 (“TCO”) considering the fact that proxy contracts that can be unilaterally terminated at the instance of one of the parties.
b. Election of New Board Member
Resignation of a board member is a unilateral legal act which does not have to be accepted by others in order to be effective. Furthermore, it does not have to be based on justified grounds. However, if the resignation is made within an inappropriate time, the board member who resigned may be held liable for their actions due to duties of care and loyalty pursuant to Article 369 of the TCC.
As a consequence of resignation of a board member, a person meeting the legal requirements will be appointed as temporary board member by Board of Directors and this appointment will be submitted to the next general assembly for approval pursuant to Paragraph 1 of Article 363 of TCC. Member who is appointed by this way will continue to perform his duty until the convening of the general assembly to which he will be submitted for the approval and in case of approval of his appointment in the respective general assembly, he will complete the duty period of his predecessor.
c. Actions that should be Taken When All of the Directors Resign or the Quorum Determined in the Articles of Association cannot be Complied
The major concern regarding resignation occurs when all board members resign or if the one and only board member resigns or the quorum determined in the Articles of association cannot be complied. The company will be left without a board in these circumstances.
The Company may be confronted with the dissolution as a result of a court decision given upon request of shareholders, creditors of the company or Ministry of Customs and Trade in accordance with Article 530 of TCC titled “Absence of the Organs”. In addition, the court may decide to appoint a trustee pursuant to Paragraph 1 of Article 412 of TCC.
The problem arises from collective resignation or resignation of sole board member is that there is no organ or an organ member to be notified of the resignation. If this situation arises, the person authorized to call the general assembly to a meeting shall be notified of the resignation. According to Paragraph 2 of Article 410 of TCC, this person can be one of the shareholders[1]. Pursuant to this article, one of the shareholders is entitled to call the general assembly to a meeting by an order of the court in the events that the board of directors is not able to convene consistently, or that the quorum may not be reached or it is not possible for it to be reached.
In the event that all board members resign during a general assembly, the election of new board members may be included in the agenda since shareholders may include any additions to the agenda unanimously.
If all board members resign at any time other than during the general assembly meeting, shareholders may apply to the court for the request of convening the general assembly with the purpose of electing new board members, in order to prevent the company from being left without a board of directors.
[1] Prof. Dr. İsmail Kırca (Manavgat/Şehirali Çelik), Anonim Şirketler Hukuku, C. 1, Ankara 2013, p. 466
Türkçe Versiyonu İçin
