Election of a New Board Member via Cooptation Method in case of Vacancy 4 July 2018
Under Article 408 of the Turkish Commercial Code numbered 6102 (“TCC”,) appointment of members of board of directors (“BoD”) are among the powers of the general assembly which cannot be transferred. However; several exceptions have been regulated by the TCC to this rule. One of these exceptions is the temporary appointment via cooptation method which is regulated under Article 363/1 of TCC. Within this respect, when a vacancy occurs, the BoD may elect a new member temporarily.
Before examining this exceptional appointment, explaining the ways of termination of a membership would be useful. Firstly; thereunder Article 359 of TCC, a BoD member should have full legal capacity which means, person should have power of discernment and not be interdicted. If a member loses legal capacity, then he would not be eligible to perform as a member of the board anymore.
Member of board may be elected within for fixed period of time, which cannot exceed three years in total and when this time period expires, the membership would be terminated.
In accordance with Article 362/2, bankruptcy is another ground for the termination of the BoD membership. Other grounds can be listed as the death or resignation of the member. In these situations mentioned above, no process is required in order to terminate membership. In other words, membership will be terminated automatically.
Articles of Association of the company (“AoA”) might also contain specific regulations regarding the termination such as stating that the membership of the board member who fails to attend the BoD meetings twice in a year shall be terminated. In this case, membership of the member breaching the AoA will be terminated. Same shall apply in the case the member is dismissed by a resolution of the general assembly.
When one of the situations mentioned above occurs, BoD may elect someone who suits the requirements set by the TCC and invoke the approval of general assembly. Appointment of the new member via this method is called cooptation. The member elected by this way shall perform his duty temporarily until the closest general assembly meeting and complete the remaining time of his predecessor in case the general assembly gives its approval to such appointment.
Election via cooptation shall be invoked for the vacancies appear in the BoD and cannot be used for changing the whole BoD. Otherwise; there would be a breach of Article 408 of TCC which regulates that the appointment non-transferable authority of general assembly.
Unless otherwise is agreed in the AoA, quorum of meeting for cooptation is the majority of all members and quorum of decision is majority of those present in accordance with Article 390/1.
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