Türkçe
Members of the board of directors and general managers in joint stock companies, and company managers in limited companies often do not have information about the legal, criminal and financial liabilities they undertake regarding company management. This lack of information prevents managers from taking the necessary measures to protect themselves and the company, resulting in unavoidable liabilities.
So, what are the situations that pose such great risk to company directors? Is it possible for them to be disposed of?
In joint stock companies, the board of directors and in limited companies, the company manager has the authority to represent and manage the company, acting as the legal representative of the company. Accordingly, as a rule, members of the board of directors and company managers are responsible for the performance of companies’ debts and liabilities.
Liabilities of Directors Due to Dishonored Cheque
In accordance with article 5/2 of the Cheque Law; a judicial fine will be imposed on the officials who cause the cheques of the company to be treated as “dishonored”, as well as a ban on issuing checks and opening cheque accounts. In addition, the company may recourse to the relevant director regarding the loss incurred due to the said dishonored cheque.
Pursuant to article 5/2 of the Check Law; “In case the owner of the check account is a legal person, the member of the management body assigned to carry out the financial affairs of this legal person, and if such a determination is not made, the real person or persons forming the management body are obliged to keep the cheque provision in the relevant bank account. In accordance with the first paragraph, those who are decided to be banned from issuing cheques and opening cheque accounts cannot be assigned to the management bodies of capital companies during their prohibition. However, the current management memberships of those who have been given a ban will continue until the end of their term of office.“
As can be clearly seen from the text of the law; company officials are responsible for ensuring that the amounts of the cheques issued on behalf of the company are in the relevant bank account. Therefore; if the cheques issued by the company are dishonored, a judicial fine may be imposed on the members of the board of directors of the company and the company managers, and additionally a ban on issuing cheques and opening cheque accounts.
Liabilities of Company Directors Regarding Payment of Negotiable Instruments Issued by Exceeding the Representation Authority
In accordance with Article 678 of the Turkish Commercial Code; “The person who signs a bill of exchange as the representative of a person although he is not authorized to represent is personally liable for that bill of exchange… The provision is also applicable for the representative who exceeds his authority.“
In line with the mentioned provision of the relevant law; in the event that the members of the board of directors, company managers or general managers sign a bill of exchange by exceeding his authority to represent the company, this person will be personally liable for the part of the amount written on the said bill of exchange which exceeds his authority.
Liabilities of Company Directors for Tax Debts of the Company
Pursuant to Article 10 of the Tax Procedural Law No. 213 (“TPL”); the obligation to pay tax debts of companies is fulfilled by the legal representative. Taxes and related receivables that cannot be collected from the assets of the company in whole or in part due to the failure of the legal representative of the company to fulfill his duty, are collected from the personal assets of the representatives who do not fulfill their legal duties.
Liabilities of Company Directors for Public Debts of the Company
Within the scope of Repeating Article 35 of the Law on the Procedure for the Collection of Public Receivables numbered 6183 (“LPCPR”); public receivables that cannot be collected from the company’s assets are collected from the personal assets of the company’s legal representatives. However, different from the regulation in the Tax Procedure Law, there is no requirement here that the representative does not fulfill his duty.
Repeating Article 35 of the LPCPR is valid for both joint stock company and limited company directors. However; in addition to this, unlike joint stock companies, it is regulated under Article 35 of the same Law that the shareholders of the limited company will be directly liable for the public debts that cannot be collected from the company in whole or in part, in proportion to their capital shares. In other words, in limited companies, the shareholders of the company are also liable for public debts together with the legal representatives of the company.
Although all kinds of public debts are included in the scope of the LPCPR, only tax debts are regulated under the TPL. In that respect; based on the fact that the Tax Procedure Law is a special regulation against LPCPR, Article 10 of the Tax Procedure Law will be applied for tax debts and, LPCPR will be applied for any other public debts.
Liabilities of Company Directors for SSI Contribution Debts
In accordance with the 88th Article of the Social Insurance and General Health Insurance Law numbered 5510; in the event that SSI insurance contributions and other receivables are not paid within the periods specified in the Law without a justified reason, senior executives or officials of the company, including the company’s board of directors and their legal representatives are jointly and severally liable with their employers for the payment of these debts to the institution.
According to this article; regarding the unpaid SSI contribution debts of the company, it will be possible to pursue debt collection procedures directly against the senior executives or officials without the obligation to pursue debt collection procedures against the company. As different from Tax Procedure Law and LPCPR, it is not required to be a legal representative for being liable for the SSI contribution debts and senior managers or authorized persons can also be subjected to liability, even if they are not legal representative of the company.
Tort Liability of Company Directors
In accordance with the 371/5 article of the Turkish Commercial Code; the company is liable for the tortious acts committed by those authorized to represent or manage the company while performing their duties. However, the company will then be able to recourse to the manager who committed such tortious act.
Legal Liability of Company Directors
As per Articles 553 and 644 of the Turkish Commercial Code; members of the board of directors, company directors and executives are liable for damages to the company, shareholders and creditors if they violate their obligations arising from the law and the articles of association. However; pursuant to Article 557 of the Turkish Commercial Code; the said managers will be liable for the damages they cause to the company in proportion to their faults.
Criminal Liability of Company Directors under Turkish Commercial Code
Pursuant to Articles 562/8-9-10 and 644 of the Turkish Commercial Code; company directors who commit the following acts will be subjected to the related sentences:
a) If the documents related to the establishment of the company, capital increase or decrease, merger, division, change of type are forged or misrepresented in the commercial books, sentence of imprisonment from 1 to 3 years;
b) In case of misrepresentation regarding the capital of the company (pretending to be paid although not fully paid), sentence of imprisonment from 3 months to 2 years or judicial fine;
c) In the case of imposing a higher price than its precedent in the valuation of the capital in kind or the valuation of the business or assets to be acquired or any other corruption related to this value; judicial fine not less than 90 days;
In addition to the criminal liability specified herein; company directors who commit these acts will also be legally liable for the damages incurred due to these acts in accordance with articles 549, 550 and 551 of the Turkish Commercial Code.
Criminal Liability of Company Directors under Turkish Penal Code
In accordance with Article 164 of the Turkish Penal Code; if a company director or representative provide or cause to provision of false information in public statements or reports submitted to the general assembly, which may cause harm to the concerned, he will be sentenced with imprisonment from 6 months to 3 years or a judicial fine amounting up to thousand days.
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