Corporate governance duties of directors in Turkish companies include care, loyalty, proper representation, oversight of finance and risk, conflict management, and liability for breach. This guide explains board duties in Turkish joint stock companies and manager duties in limited liability companies under Turkish law.
Introduction
The phrase corporate governance duties of directors in Turkish companies covers much more than attending meetings and signing resolutions. Under Turkish law, directors and managers are expected to protect the company’s interests, act with care and honesty, supervise corporate organization, oversee financial reporting and risk, avoid conflicts of interest, respect limits on self-dealing and competition, and carry out representation in line with the law and the company’s constitutive documents. In listed companies, these baseline duties are further shaped by the Capital Markets Board’s corporate governance framework.
This subject matters for both domestic and foreign-controlled companies because Turkish company law does not treat governance as optional corporate etiquette. The Turkish Commercial Code places management and representation at the center of the board of directors in joint stock companies and at the center of managers in limited liability companies. The Ministry of Trade’s official guide also makes clear that these are the two most common company forms in Türkiye and that the board or managers are the organ mainly responsible for management and representation.
For foreign investors, the issue is especially important because Türkiye’s company law is open to international participation. Official Invest in Türkiye guidance states that international investors have the same rights and liabilities as local investors and may establish company forms under the Turkish Commercial Code under the same basic conditions as domestic investors. That means foreign shareholders usually enter the same governance framework as Turkish shareholders; they do not operate under a separate “foreign-company” corporate-governance regime. (Türkiye Yatırım Ofisi)
This guide explains the main corporate governance duties of directors in Turkish companies from a practical legal perspective. It focuses on the duties of board members in joint stock companies (JSCs) and the duties of managers in limited liability companies (LLCs), because Turkish law uses those two structures most often. It also explains how these core duties are supplemented for public companies by the Capital Markets Board’s corporate governance regime.
Who Counts as a “Director” Under Turkish Company Law?
In a Turkish joint stock company, the relevant governance organ is the board of directors. Article 359 of the Turkish Commercial Code states that a joint stock company has a board consisting of one or more persons appointed by the articles of association or elected by the general assembly. The Ministry of Trade’s official guide similarly states that the board of directors is the organ mainly responsible for management and representation and that it may consist of a single member. (rt-union.com)
In a Turkish limited liability company, the Code uses the concept of managers, but English-language official materials often describe this organ as director or board of directors. Article 623 states that the management and representation of the company are regulated by the company contract and may be given to one or more partners, all partners, or third persons, but at least one partner must have the right to manage and represent the company. The Ministry’s English guide makes the same point in simpler terms by stating that at least one LLC director must be a partner. (rt-union.com)
So, when speaking in English about “directors” in Turkish companies, the safer legal understanding is broad: it means board members in JSCs and managers in LLCs. Their titles are not identical, but their governance obligations overlap heavily in practice, especially on care, loyalty, representation, internal organization, and liability. (rt-union.com)
The Core Duty of Care and Loyalty
The foundation of Turkish corporate governance is the duty of care and the duty of loyalty. For JSCs, Article 369 states that members of the board of directors and third persons charged with management must perform their duties with the care of a prudent manager and protect the interests of the company in accordance with the rule of honesty. This is the central fiduciary-style standard in Turkish board law. (rt-union.com)
For LLCs, Article 626 creates the parallel rule. It states that managers and persons in charge of management must perform their duties with all due diligence and observe the interests of the company within the framework of good faith. It also states that managers are subject to the loyalty duty applicable to partners. In substance, Turkish law expects LLC managers to behave with the same seriousness and loyalty that it expects from JSC board members. (rt-union.com)
These provisions matter because they shape almost every other governance obligation. Financial oversight, approval discipline, conflicts analysis, delegation decisions, and board conduct are all judged against this basic standard. In practical terms, Turkish directors are not measured only by whether they acted formally; they are measured by whether they acted carefully, honestly, and in the company’s interest. (rt-union.com)
Directors Must Act in the Company’s Interest, Not for Personal Convenience
Turkish law’s care-and-loyalty framework means directors must act for the company rather than for personal advantage. In JSCs, Article 393 bars a board member from participating in negotiations where the member’s personal non-company interest, or the personal interest of certain close relatives, conflicts with the company’s interest. The provision also requires the conflict and the reason for non-participation to be recorded in the board resolution. (rt-union.com)
The same logic appears in LLC governance through loyalty and equal-treatment rules. Article 626 binds managers to good-faith protection of company interests, and Article 627 states that managers must treat partners equally under equal conditions. This means an LLC manager cannot legitimately privilege one partner or one private interest in a way that violates the company’s or the partners’ lawful interests. (rt-union.com)
For JSCs, the corporate-governance framework also includes the broader equal treatment principle. Article 357 states that shareholders must be treated equally under equal conditions, and Article 391 provides that board resolutions contrary to equal treatment, contrary to the capital-protection logic of the company, or infringing indispensable shareholder rights may be null. So corporate governance duties are not only about internal management; they also include respecting the corporate balance between the company and its shareholders. (rt-union.com)
Non-Transferable Duties of the Board in Joint Stock Companies
One of the most important Turkish corporate-governance rules is that a board cannot delegate everything. Article 375 states that the inalienable and non-transferable duties and powers of the board include senior management of the company, determination of the management organization, establishment of the necessary financial-planning and control order, appointment and dismissal of persons with signing authority and senior management functions, supervision of whether delegated persons act in accordance with the law, the articles, internal directives, and written instructions, organization of bookkeeping and financial-reporting order, preparation of the annual report, organization of general assembly meetings, implementation of general assembly resolutions, and notifying the court if the company becomes over-indebted. (rt-union.com)
This article has a major practical effect. Turkish boards may delegate execution and day-to-day functions, but they may not delegate away the core architecture of governance itself. A board that passively allows executives or advisers to run the company without proper supervision risks breaching one of the Code’s most central duties. (rt-union.com)
The non-transferable-duties rule also explains why board membership in Turkey is not merely honorary. Even where the board is not involved in every operational decision, it remains the legally responsible organ for the company’s top-level organization, internal oversight, and lawful functioning. (rt-union.com)
Non-Transferable Duties of Managers in Limited Liability Companies
Turkish LLC law mirrors this logic. Article 625 states that managers are competent in all matters not reserved to the general assembly by law or the company contract, but it also sets out duties and powers they cannot delegate or waive. These include high-level management and instruction, determination of the management organization, establishment of accounting, financial audit, and financial planning structures, supervision of those to whom duties have been delegated, preparation of financial statements and annual reports, preparation of the general assembly, execution of general assembly resolutions, and notification to the court if the company is over-indebted. (rt-union.com)
This is a crucial point for foreign investors who use LLCs as wholly owned Turkish subsidiaries. The LLC may look simpler than a JSC, but its managers still carry a serious governance burden. Turkish law does not let an LLC manager escape responsibility by saying the company is small, closely held, or owner-driven. The manager remains responsible for the company’s legal and financial organization. (rt-union.com)
Article 625 also says that even where the company contract requires certain decisions to be submitted to the general assembly for approval, that approval does not eliminate or limit the managers’ responsibility. This is highly important in practice: internal approvals do not automatically cleanse a manager of liability for a bad governance decision. (rt-union.com)
Representation and Signatory Authority Are Governance Duties Too
Corporate governance in Turkey is not limited to internal decision-making. It also includes representation. Article 371 states that persons authorized to represent a JSC may carry out all legal acts falling within the scope of the company’s purpose and business and may use the company title for that purpose, while the company retains recourse rights if the act violates law or the articles. This makes representation authority both a power and a responsibility. (rt-union.com)
The Ministry of Trade’s official guide reinforces the same governance concept by stating that the JSC board is mainly responsible for management and representation and that the LLC director or managers are likewise the organ mainly responsible for management and representation. This means that choosing who signs for the company is not a clerical issue; it is one of the most important governance design decisions at incorporation and after.
For LLCs, Article 629 says that the JSC rules on the scope and limitation of representation authority, the determination of authorized signatories, the form of signature, and registration and announcement apply by analogy. So LLC managers must also treat representation as a structured legal function, not as an informal practical arrangement. (rt-union.com)
Financial Reporting, Internal Control, and Risk Oversight
The directors’ governance role in Turkey extends directly into finance and risk. In JSCs, Article 375 makes the board responsible for establishing the necessary order for accounting, financial audit, and financial planning. Article 398 then links the board’s financial-reporting responsibility to independent audit, stating that the audit covers the company’s financial statements, annual report, inventory, accounting, and internal control to the extent required by Turkish Auditing Standards. (rt-union.com)
Turkish law also imposes a specific risk-governance duty in some cases. Article 378 states that in listed companies the board must establish an expert committee for the early detection and management of risk, and in other companies the committee must be established where the auditor deems it necessary and informs the board in writing. The committee reports to the board every two months and also sends its report to the auditor. (rt-union.com)
This is a strong signal that Turkish law expects directors to do more than react to crises after they appear. In public companies especially, and in some non-public companies where the auditor triggers the mechanism, the board must have an active risk-detection structure rather than a purely retrospective control system. (rt-union.com)
LLC managers have a parallel obligation through Article 625, which requires them to establish accounting, financial audit, and financial planning order and to notify the court if the company is over-indebted. So whether the company is a JSC or an LLC, Turkish corporate governance places directors and managers at the center of financial integrity and early intervention. (rt-union.com)
Directors Must Use the Board Process Properly
Turkish corporate governance also depends on using the board process lawfully. Article 390 states that, unless the articles impose a stricter rule, the board of directors meets with the majority of the total number of members and adopts resolutions by the majority of those present. It also states that members cannot vote by proxy for one another and cannot attend board meetings by proxy. (rt-union.com)
The same article also allows written resolutions without a meeting if no member asks for a meeting and if a written proposal is approved by at least the majority of the full board. But the validity of such written resolutions depends on the proposal being submitted to all members and on the approvals being properly recorded in the board resolution book. This means Turkish law gives boards flexibility, but not informality. (rt-union.com)
A director who ignores quorum, voting, circulation, or recording rules may not only create a bad governance practice but may also expose the company to challenges against the validity of board resolutions. Turkish law expects process discipline as part of the board’s core duties. (rt-union.com)
Information Rights Are Part of Oversight, Not a Personal Privilege
Turkish board members are expected to govern actively, and the law gives them tools to do so. Article 392 states that every JSC board member may request information, ask questions, and examine the company’s transactions and affairs. It says that requested books, records, contracts, correspondence, and documents may not simply be withheld from a board member, and that information may be sought from managers and employees. If the request is refused, the matter may be escalated to the board and then to the commercial court, whose decision is final. (rt-union.com)
This is not merely a personal privilege of curiosity. It is part of the director’s governance duty. A director cannot credibly supervise management, financial reporting, or risk if the director never asks for records or never challenges unexplained issues. Turkish law therefore treats access to information as part of responsible governance. (rt-union.com)
For LLCs, Article 629 applies the JSC representation rules by analogy, and the Code expressly cross-references Article 392 for managers’ information rights by analogy in the LLC context as well. So active information use is expected on both sides of Turkish company law. (rt-union.com)
Conflict Rules, Self-Dealing, Borrowing, and Competition
A central part of corporate governance duties in Turkish companies is avoiding misuse of office. Article 393, as noted, prohibits participation in negotiations where personal and company interests conflict. Article 395 goes further by stating that a JSC board member may not transact with the company on behalf of himself or another without general assembly permission. The same article also restricts borrowing from the company by non-shareholder board members and certain relatives. (rt-union.com)
Article 396 adds the non-compete rule for JSC board members. Without permission from the general assembly, a board member may not on his own or another’s behalf engage in a commercial transaction that falls within the company’s business scope, nor may the member join a competing company as a partner with unlimited liability. This rule matters greatly in family businesses, group structures, and founder-driven companies where lines between ventures can blur. (rt-union.com)
LLC managers face a comparable rule under Article 626. Unless the company contract provides otherwise or all other partners consent in writing, managers may not engage in activities competing with the company. The company contract may replace unanimous partner consent with general assembly approval. So Turkish law clearly expects managers, like JSC directors, to avoid competing against the entity they govern. (rt-union.com)
Public Companies: The Capital Markets Board Overlay
For listed and capital-markets-facing companies, Turkish director duties do not stop with the Turkish Commercial Code. Official Capital Markets Board material states that Corporate Governance Communiqué II-17.1 sets the general standards of corporate governance in Turkey and that listed companies on Borsa İstanbul are subject to comply with the Corporate Governance Principles. The same official material shows that the framework is built around four main categories: shareholders, public disclosure and transparency, stakeholders, and the board of directors. (Sermaye Piyasası Kurulu)
This matters because directors of public companies carry an expanded governance burden. In addition to ordinary TCC duties, they are expected to operate in a disclosure-heavy environment where board structure, committee functioning, investor relations, independence, and public transparency become part of governance quality. In practice, that means a listed-company director in Türkiye is not judged only under classic company-law standards but also under capital-markets governance expectations. (Sermaye Piyasası Kurulu)
The TCC and public-company rules also intersect around risk and audit. Article 378 obliges listed-company boards to maintain an early-risk committee, while Article 398 requires audit attention to the board’s risk-management system and committee structure. So public-company board duties in Türkiye are both broader and more institutionalized than in ordinary closely held companies. (rt-union.com)
Liability for Breach of Corporate Governance Duties
Corporate governance duties matter because Turkish law attaches liability to their breach. Article 553 states that founders, board members, managers, and liquidators are liable for damage they cause to the company, the shareholders, and the company’s creditors if they violate obligations arising from the law or the articles of association. The same provision also creates a form of safe harbor for delegated functions: a person who lawfully transfers a duty or power is not liable for the acts of the delegate unless it is proved that reasonable care was not exercised in choosing that person. (rt-union.com)
This is one of the most important articles in Turkish corporate-governance practice. It means directors and managers are not judged only politically or commercially; they can face legal exposure if faulty governance causes loss. At the same time, it also means that proper delegation and proper selection of delegates matter. Delegation does not automatically create liability, but careless delegation can. (rt-union.com)
For LLCs, Article 625 expressly states that general assembly approval of certain submitted matters does not eliminate or limit managerial responsibility. That is an additional warning to owner-managers and closely held companies: internal approval is not a full liability shield where the manager has still violated law, contract, or duty. (rt-union.com)
What Good Corporate Governance Looks Like in Practice
In practical terms, good governance by directors in Turkish companies usually means doing the following consistently: ensuring the company has a functioning management organization, verifying that representation powers are properly documented and registered, maintaining reliable financial-reporting and internal-control systems, escalating capital-loss or over-indebtedness issues early, using information rights actively, documenting meetings and resolutions properly, and refusing to participate where personal interests conflict with the company’s interests. All of those expectations flow directly from the TCC rules on care, loyalty, information, non-transferable powers, representation, conflicts, and liability. (rt-union.com)
For foreign-owned Turkish companies, good governance also means not treating the Turkish board or Turkish managers as symbolic appointments. The local company is governed by Turkish law, and its directors’ duties are measured by Turkish standards even if the shareholders, group policies, or key executives are located abroad. Turkish company law expects the appointed directors or managers to function as real corporate organs, not merely as formal signatories. (Türkiye Yatırım Ofisi)
Conclusion
The corporate governance duties of directors in Turkish companies are broad, substantive, and enforceable. In joint stock companies, the board of directors carries a legally structured duty of care and loyalty, a set of non-transferable governance powers, information and oversight responsibilities, conflict and non-compete obligations, and potential liability for damage caused by breach. In limited liability companies, managers carry a closely parallel burden under Articles 623, 625, 626, and related provisions. (rt-union.com)
The practical lesson is that Turkish law does not view directors as passive office-holders. It expects them to organize, supervise, question, document, protect, and intervene. In public companies, those duties are further expanded by the Capital Markets Board’s corporate governance framework, which brings disclosure, stakeholder, and board-structure expectations into sharper focus. (Sermaye Piyasası Kurulu)
For that reason, the best way to think about board or manager service in Türkiye is not as a formal appointment but as an active legal role. When directors understand the Turkish governance framework early—especially care, loyalty, non-transferable duties, representation, conflict discipline, and liability—they put the company in a stronger position and reduce their own risk at the same time. (rt-union.com)
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