What Is Duty of Loyalty of Limited Liability Company Shareholders? 3 October 2019
Limited Liability Company is an equity company established by its shareholders for a specific purpose. For this reason, the common purpose should always be prioritized, and the company's interests must be protected from the actions of the shareholders.
Article 613 of the Turkish Commercial Code (“Law”) imposes a duty of loyalty to the shareholders of the limited liability company. Under this mandatory provision, there are two types of duty of loyalty for shareholders to comply with:
- Obligation of Confidentiality
Under the first paragraph of article 613 of the Law, the shareholders of the limited liability company are obliged to preserve the secrets of company. Although the concept of secrets is not defined in the law; the facts that are known by certain persons related to the economic field of the company, which cannot be easily learned by others, that the company has an interest in preserving and which are desirable to be kept secret by the company are defined as secret in the doctrine.
Pursuant to this obligation, shareholders shall not disclose the company secrets they have obtained due to their close relationship with the company and should not take advantage of them. Unlike other obligations, the obligation of confidentiality cannot be abolished by a company agreement or a general assembly resolution.
When determining the obligation of confidentiality, the link between shareholder and company should be evaluated. For example, a shareholder who has a poor personal relationship with the company, and another shareholder with a strong personal relationship with the company should not be considered as the same.
- Prohibition of Competition
Under the second paragraph of article 613 of the Law, shareholders cannot act in a way that could damage the interest of the company. The act of damaging the interests of the company covers all kinds of behaviours that will put the company in a bad position, affect the investments negatively and hinder the activities related to the realization of the purpose of the company.
It is expressly prohibited for the shareholders to carry out transactions that provide them a special interest and harm the purpose of the company. As is known, shareholders of such company have limited liability for debts, and their rights regarding shareholding are attached to capital. Therefore, since the company cannot directly be considered as subject to the prohibition of competition, the prohibition of competition should be included in the article of association as an explicit provision.
Duty of loyalty involves all shareholders including managers. However, if all the remaining shareholders give their approval, it is possible to engage in activities that are contrary to the obligation of loyalty and prohibition of competition according to the fourth paragraph of article 613.
Türkçe versiyonu için tıklayınız:
http://www.kasaroglu.av.tr/tr/39917/Limited-Sirket-Ortaklarinin-Baglilik-Yukumlulugu
