Administration and Representation Authority of Joint Stock Company, Board of Directors

The joint stock company is administered and represented by the board of directors in principle. The board of directors carries out its administration task and authority with a decision that it will reach due to being the board organ. It is understood that the regulations for the administration and representation of joint stock corporations are formed in the framework of professional administration and transparency principles as per Turkish Code of Commerce (TCC) numbered 6102. Accordingly, it is stipulated that the board of directors may transfer company administration to one or several board of director members or to third party (parties) who do not have to be board of director members necessarily. Partial or complete transfer of the administration is possible. The transfer of the administration is a transfer of an organ function and does not contain the transfer of representation authority as a rule. This is because the administration and representation authorities of the board of directors are separated by the current Turkish Code of Commerce.

Individuals who have the power to represent the joint stock company, can carry out any works and legal processes that are included in company operation scope and purpose under the company title. Any type of work and legal processes included in the company subject and purpose determine the scope of the representation power. Limitation of representation authority cannot be asserted to third persons who have goodwill as a rule. However, limitation of representation authority to central or branch works and voluntary limitations in the form of joint representation (double signature) will be valid if they are registered and announced in the trade registry. As it is in the transfer of the administration authority, representation authority can be transferred to delegate members and delegate directors who don’t have the obligation to have a share by the board of directors.

For the transfer of the representation or administration authority of the board of directors, it is required that there must be a clear provision in the main agreement about this matter and the transfer of authority must be made according to an internal directive which will be prepared and finally, there must be a board of directors decision regarding this.

Company administrator has to be careful about remain within the operation subject and representation authority as doing procedures on behalf of the company because of the joint stock corporation could be held responsible for administration decisions and processes that remain out of the company operation subject since ultra vires principle is not included in the current Turkish Code of Commerce.

Absolved from responsibility of board of director members in case of authority transfer depends on the authority transfer is pertinent to law, main agreement provisions and ways and conditions determined in the internal directive. Otherwise, the authority transfer will not be valid and it will accepted as a work sharing pursuant to article 366 of Turkish Code of Commerce  and the board of director members and the persons who use their administration and representation authority will become liable for losses that occur due to the usage of the transferred authorities jointly and severally.

Spread the word. Share this post!

Leave a comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.