INTRODUCTION
The legal structure of joint stock companies requires the effective execution of management and representation functions. In this respect, under the Turkish Commercial Code No. 6102 ("TCC"), which is in force as of 4 August 2025, the authority to manage and represent the company is principally granted to the board of directors. The board of directors is authorized to make decisions, carry out transactions, and represent the company before third parties on behalf of the company. However, these powers are accompanied by certain significant legal responsibilities. In particular, cases where the company suffers damages due to the fault of the board members and lawsuits for liability are frequently encountered in commercial law practice. Within this framework, in assessing the liability of board members, the limits and conditions of such liability under the TCC must be considered, and in particular, the effects of discharge (release) resolutions adopted by the general assembly on such liabilities must be evaluated.
A. LEGAL LIABILITY OF BOARD MEMBERS AND THE EFFECT OF THE RELEASE MECHANISM
The legal nature of the relationship between the board members and the company is essentially based on a contract of mandate. As a rule, board members are not personally liable for the actions they perform in their capacity as directors; the rights and obligations arising from such actions are, in principle, attributed to the legal entity of the company. Accordingly, third parties cannot directly bring claims against board members and must direct their claims to the company. However, if the company suffers any loss due to the board members' breach of their statutory or contractual (articles of association-based) obligations as a result of fault, it is possible to bring a liability action against such board members pursuant to Article 553 of the TCC. This type of lawsuit may only be initiated by the company itself, the shareholders, or, in the event of the company's bankruptcy, by its creditors. Therefore, in cases where the company is not bankrupt, its creditors do not have a direct right of action. If shareholders bring such an action, the compensation must be claimed for the benefit of the company, not for themselves. In summary, the primary purpose of liability lawsuits brought against board members is to remedy the damage caused to the company. Claims for inpidual damages suffered by shareholders or creditors fall outside the scope of such actions and are subject to separate legal considerations.
Special provisions regarding the effect of the discharge resolution adopted by the general assembly on potential liability claims against board members are set forth under Article 558 of the TCC. In this regard, the resolution of the company's general assembly concerning the discharge from liability removes the right to bring a liability claim for the factual matters covered by such discharge, both for the company and for the shareholders who voted in favor of the discharge resolution and acquired their shares with knowledge thereof. As for the other shareholders, their right to initiate a liability claim lapses six months after the date of the discharge resolution. As can be seen, the discharge of board members by the general assembly eliminates the right to bring a liability action—regarding the factual matters covered by the discharge—not only for the company and the approving shareholders, but also for the remaining shareholders after the lapse of six months. Accordingly, if a board member has been discharged in the broadest sense by a general assembly resolution, then even if the company has suffered damage due to the member's fault, neither the shareholders nor the company may assert any claims or initiate a liability action against such board member. Therefore, discharge resolutions provide significant legal protection for board members. On the other hand, pursuant to Article 436(2) of the TCC, board members and shareholders holding signing authority may not exercise their voting rights arising from their shares in respect of discharge resolutions concerning board members. The purpose of this provision is to ensure impartial oversight of the company's management and to prevent conflicts of interest in the decision-making processes. Fundamentally, the aim of this regulation is to ensure that board members may be held liable for damages incurred by the company in cases where they fail to fulfill or neglect their statutory or contractual obligations under the articles of association.
However, in the event of the company's bankruptcy, pursuant to Article 556 of the TCC, the company's creditors may also directly bring a liability action, requesting that compensation be paid to the company. In such case, the right to initiate the action is first granted to the bankruptcy administration. If the bankruptcy administration fails to file the necessary lawsuit, each creditor becomes entitled to exercise this right inpidually. At this stage, a discharge resolution adopted by the general assembly does not eliminate the creditors' right to bring a claim. This is because the discharge resolution binds only the company itself and those shareholders who voted in favor of the resolution, and does not impose any limitation on the rights of the company's creditors.
B. CONCLUSION
The board of directors is a mandatory corporate body responsible for the management and representation of the company. As there exists a relationship of mandate between the board of directors and the company, the actions taken by board members bind the company directly. Therefore, claims brought directly by third parties against inpidual board members, as a rule, do not have legal effect; liability rests solely with the company. However, if the company incurs damages due to the board members' faulty conduct in breach of the law or the articles of association, the personal liability of such members may arise. In such cases, the right to initiate a liability action is granted to the company as the injured party, as well as to its shareholders and creditors.
The discharge resolution adopted by the general assembly has a decisive legal effect in terms of the emergence of liability. Upon the adoption of such resolution, the right to initiate a liability action is extinguished for both the shareholders who voted in favor and the company with respect to the relevant period. As for the shareholders who either voted against the resolution or did not attend the meeting, this right is subject to a six-month forfeiture period starting from the date of the discharge. On the other hand, the company's creditors may bring a direct liability action against the board members only in the event of the company's bankruptcy. Even in such case, the discharge resolution does not eliminate the creditors' right to initiate a lawsuit.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
