The article no. 359 of the Turkish Trade Act no. 6102 has regulated the initiation of the duties of the member of the board of management under two categories; appointment and election. Appointment occurs if the initiation takes place during the formation of the prime contract, whereas the election occurs when the members of the board of management elects the member.
The legislator has dictated that the primary liability of the board of management is to make all the decisions that are related to the realisation of the main subject of the company and have also stated that the duty of the members of the board of management is to give directions in accordance with this and that they cannot transfer this duty, nor refrain from carrying it out. The legislator has outlined the non-transferable and non-deniable duties of the directing/managing body of the company through the article no. 375 of the Turkish Trade Act and has outlined the duties of the members of the board of management which are of high priority.
The members of the board of management are liable for financial supervision (audit), the supervision of those who have a high-level position in management, for the determination of the amount of debts and to appoint and dismiss the members of the board of management. The article no. 392 of the Turkish Trade Act gives the members of the board of management and the president the right to obtain and examine information. It can be understood that a balance between the liabilities and rights was aimed for.
Theoretical works which have been written about the right to obtain information study this right under three periods: obtaining information and being able to examine it outside the management board meeting, before the management board meeting and after the management board meeting.
- THE RIGHT TO OBTAIN AND EXAMINE INFORMATION OUTSIDE THE MEETING
The right to obtain and examine information has been regulated by the article no. 392/3 of the Turkish Trade Act. The legislator/The legislating body has dictated that the right of member of the board of management to obtain and examine information depends on the application of the member and the consent of the president of the board of management. The legislator has not determined any specific style for the application of the member. In accordance with this, it is possible to say that a verbal demand may suffice. Yet, a writing is important in terms of proving the validity. The need for the consent of the president of the board is a limitation which concerns the very essence of the right. The preamble of the text of the article states that this is necessary to make sure that the member who examines the records and the documents of the company does so in accordance with the principles of accountability. It is also stated in the preamble that a member, normally, does not hold the right to obtain information outside the meeting. The need for the consent of the president of the board of management for the obtainment of information about the trend of affairs by a member has been subject to criticism in the doctrine. Even though there have been some claims that the limitation derives from a mistake of translation concerning the source of the law, article no. 715 of the Law of Obligations of Switzerland, the arguments presented in the preamble of the texts diminish such claims. Such a limitation on the rights of the members of the board of management is contradictory to the regulations of the law no. 6102 which promote transparency and therefor is contradictory to the essence of the law. Such a limitation would limit the member’s ability to work for the interests of the company with full efficiency and forms a contradictory situation while the article no. 369 of the Turkish Trade Act dictates that the member is liable for the duty of care and for making decisions for the advantage of the company. It is also clear that the meeting, as regulated by the prime contracts or internal directives of incorporated companies, take place very rarely and the need for the members to wait for the meetings puts the members’ ability to work with full efficiency at risk and diminishes their ability to benefit from their rights.
Even if we were to assume that the member calls for an extraordinary meeting it would be the president of the board who decides to make the deciding call for this meeting according to the article no. 392/7 of the Turkish Trade Act. It is quite possible that a board president who does not provide the members with the right to obtain and examine information can also try to disable the member’s opportunity to demand a call for an extraordinary meeting. Yet, Prof. Dr. Hasan Pulaşlı thinks that the member would be able to directly call for an extraordinary meeting in such a situation.
1.A THE EXTENT OF THE RIGHT TO OBTAIN INFORMATION OUTSIDE A MEETING
The legislator has limited this right to the information concerning the trend of affairs and specific works concerning the member. The general trajectory of the state of the company is meant by the “trend of affairs.” The extent of the demand of the member must be limited to the basic information about the trend of affairs of the units of the company rather than being about a specific subject. By using the term “specific works/matters” the legislator has meant the thorough examination of some particular issues, such as the thorough examination of the application general or management board decisions made in the previous meetings or the process of a suit filed against the company.
1.B THE RIGHT TO EXAMINE BOOKS/RECORDS AND DOCUMENTS
A member of the board of management holds the right to examine the records and the documents of the company outside a meeting if it is necessary to fulfilment of the duties of the member. The legislator has explained the term “fulfilment of the duties” with the principle of accountability and ruled that a member holds the right to demand an examination of the records and documents as long as such a demand is in accordance with the principle of accountability. The principle of accountability of the members of the board of management concerns how the members are liable for the legal body of the company, and therefore, for the shareholders. Based on this, it is accepted that all the duties conferred upon the board of management with the article no.374 and 375 of the Turkish Trade Act are within the extent of the principle of accountability. In accordance with this, the records and the documents of the company can be examined by the members of the board of management concerning the financial supervision and management of the company, the formation of the plan necessary for a financial regulation and verify the application of rules of laws, the prime contract and internal directives.
1.C THE EXPANSION OF THE SCOPE OF THE RIGHT TO OBTAIN INFORMATION AND TO EXAMINE BOOKS/RECORDS AND DOCUMENTS OUTSIDE A MEETING
The scope of the right to obtain information outside a meeting can be expanded beyond “the trend of affairs and some specific works” with an internal directive, but the scope of the same right cannot be narrowed down through an internal directive. It is not possible for the general board to expand the scope of the right to obtain information through the prime contract, as the board of management is given an exclusive authority to form the managing body of the company.
1.D. THE DEMAND TO OBTAIN AND EXAMINE INFORMATION
If the president of the board of management refuses a member’s right to obtain and examine information, the issue will be brought up to the board of management and a ruling will be issued within two days. The board meets with the majority of the total members of the board. The ruling is issued with the most votes. The members are able to join this meeting only personally.
1.E. APPLICATION TO THE COURT
If the president of the board refuses the member’s right to obtain and examine information, in accordance with the article no. 392/4 of the Turkish Trade Act no. 6102, outside a meeting and if the board dismisses the issue and refuses to issue a ruling within 2 day, the member holds the right to apply to a basic commercial court, located within the same district as the centre of the company. The right of the president to obtain information outside a meeting is subject to the article no. 392/5 with the same ruling. The civil courts of first instance are authorized if there are no basic commercial courts in the vicinity. In accordance with the article no. 5/4 of the Turkish Trade Act, the rulings/verdicts concerning the right to obtain and examine information are final cannot be subject to an appeal.
- TO OBTAIN INFORMATION BEFORE A MEETING
Unlike the general board meeting, the principle of basing the meeting on the agenda is not obligatory for the management board meetings. Likewise, it is not obligatory to initiate call/invitation to the meeting and to include the main agenda of the meeting in the invitation. Even though there is no predetermined method of invitation for the meetings of the board of management, a certain method can be determined through an internal directive. If there are no such determined methods, an invitation through registered mail or an e-mail will suffice. Even though there are no regulations which dictate the board of management should stick to the main agenda, it is a natural necessity for the board to inform the members of the main subjects of the meeting beforehand for the efficient fulfilment of the issues defined in the articles no. 374 and 375 of the Turkish Trade Act. An agenda prepared by the president or his/her assistant would speed up the processes and introduce more discipline to the meeting. It will be possible for the members to know the main subjects of the meeting beforehand and to form and express their opinions about these matters efficiently as a result of the utilization of the right to obtain information. In accordance with this, a member of the board of management is given the right to demand information about every topic by the article no.392/1 of the Turkish Trade Act. If a member is deprived of his/her right to obtain information before a meeting and he/she decides to benefit from the right to obtain information during the meeting, it can be said that this may reduce the efficiency of the meetings.
- THE RIGHT TO DEMAND INFORMATION DURING A MEETING AND ITS LIMITS
The article no. 392/1 of the Turkish Trade Act has given the members of the board of management the right to obtain and examine information in a very broad sense. In accordance with this right, a member is able to demand information about all the dealings of a company, ask questions and carry out examinations. A member’s demand concerning the examination of a book/record, contract or any other written document and the examination of these documents by the board cannot be refused. Clause 4 will be in effect if there is such a refusal.
It is important to state that the right of the members of the board of management to demand information cannot be put out of effect through a regulation like an internal directive. Every document demanded by a member of the board will be brought to the meeting. Such a demand cannot be refused through a voting or any other way. The legislator/legislating body has drawn attention to the fact that the vast extent of this right is related to the intense nature of the duties, responsibilities and liabilities of a member of the board of management.
The information is demanded directly from the board of management. The member who demands the information cannot interact with the directors or other employees about this matter. The person who is liable for providing the member with the demanded document and information hands the documents and information over the board. The representatives who are charged with providing the board with information are directors who are in charge of the management of the company, commercial representatives, representatives and other individuals and employees commissioned with the supervision of the management. The lawyers and accountants who are not a direct part of the company are also responsible for providing the board with information, as regulated by the prime contract.
The information provided should be satisfactory. The information should have a quality in terms of content and depth, which would enable the member to make sound decisions as a businessperson.
The boundaries of the right to obtain and examine information during a meeting has been limited to the company business by the legislator and the specific works have been excluded from the boundaries of this right as long as these works/dealings do not concern the company. Enough attention must be paid so as not to allow the member who demands the information does not use it for his/her own personal interests rather than using it for the interests of the company.
The legislator has not excluded company secrets from the scope of the right, as a member of the board is responsible for acting to the advantage of the company in accordance with the article no. 369 of the Turkish Trade Act. The article requires the member to have a duty of loyalty. The duty to keep secrets, which is a requirement of duty of loyalty, is determined with the article no. 239 of the Turkish Penal Code no. 5237 and penalties are introduced for members who do not keep the company’s secrets; a reliable ground has been thus provided for the sharing of the company secrets with the members of the board of management.
This article is translated by Kaan KABALAK