Duty of Care and Loyalty of Board Members in Joint-Stock Companies Under Articles 369 and 553 of TCC No. 6102
Pursuant to Article 369 of Turkish Commercial Code No. 6102, board members of joint-stock companies must discharge their duties with the care of a prudent executive and safeguard the company's interests in good faith. Civil liability under Article 553 requires a culpable breach of statutory or charter obligations, quantifiable damage, and adequate causation, assessed through the lens of the prudent executive standard.
Statutory Framework and the Prudent Executive Standard
Article 369(1) of the Turkish Commercial Code No. 6102 ("TCC") mandates that members of the board of directors and third-party executives perform their duties with the care of a prudent executive and safeguard the company's interests in accordance with principles of good faith. TCC No. 6102 establishes an objectified standard of care benchmarked against informed corporate governance.
Whether a board decision satisfies the prudent executive test is evaluated ex ante—based on available financial data, industry risks, and diligent inquiry conducted at the time the resolution was adopted—rather than through hindsight solely because a commercial risk materialized negatively.
Delegation of Management and Supervisory Liability (TCC Art. 367 & 553/2)
Under Article 367 of the TCC, provided the articles of association contain an enabling clause, the board may delegate management powers in whole or in part to executive directors or third-party managers via an internal directive.
Where management is validly delegated, Article 553(2) limits the delegating directors' liability unless it is established that they failed to exercise reasonable care in selecting the delegates (culpa in eligendo) or neglected non-delegable high-level supervision duties under Article 375(1)(e).
Conflict of Interest and Prohibition on Participating in Deliberations (TCC Art. 393)
Article 393 operationalizes the duty of loyalty by prohibiting a board member from participating in deliberations where their personal extra-corporate interests—or those of close relatives—conflict with the company's interests. Breaching this recusal obligation triggers joint liability for resulting corporate damages.
Statutory Questions & Practical Scope
Does an informal division of tasks limit board liability without an internal directive?+
No. Under Articles 367 and 553(2) of TCC No. 6102, limiting liability via delegation requires both an explicit authorization clause in the articles of association and a formally adopted internal directive.
What is the limitation period for director liability claims under TCC Article 560?+
Claims become time-barred two years from the date the claimant learns of the damage and the liable party, and in any event five years from the act causing damage, unless a longer criminal statute of limitations applies.
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