LEGAL RESPONSIBILITIES OF DIRECTORS IN LIMITED LIABILITY COMPANIES

In limited liability companies, there are two mandatory organs: the general assembly and the directors. The representation and management of the company are carried out by the directors.

In the Turkish Commercial Code numbered 6102, the legal responsibility of a limited liability company's directors is not specifically and separately regulated. Referring to Article 644/1-a of the Turkish Commercial Code, it is stated that the provisions regarding the liability of board directors of joint-stock companies will also apply to limited liability companies. Therefore, the legal responsibility provisions applicable to members of the board of directors of joint-stock companies will be equally applied to directors of limited liability companies. The responsibility of founders, members of the board of directors, executives, and liquidation officers within joint-stock companies is regulated in Article 553 of the Turkish Commercial Code.

ARTICLE 553 - (1) Founders, members of the board of directors, executives, and liquidation officers are liable for damages caused to the company, shareholders, and creditors of the company if they violate their obligations arising from the law and the articles of association due to their fault.

(2) Organs or individuals who transfer a duty or authority arising from the law or the articles of association to others based on the law shall not be held responsible for the acts and decisions of those who take over these duties and powers unless it is proven that they did not exercise reasonable care in the selection of these persons, except in cases where it is proven that they did not exercise reasonable care in the selection of these persons.

(3) No one can be held responsible for violations or irregularities due to reasons beyond their control, and the exemption from liability due to such circumstances cannot be rendered invalid by invoking the duty of supervision and care.

In order for the responsibility of directors to arise in limited companies, the following conditions need to be met:

• The director of a limited liability company must have violated the obligations arising from the law or the articles of association for their responsibility to arise,

• The director of a limited liability company must have been at fault while violating the obligations arising from the law or the articles of association.

• Damage must occur while the director of a limited liability company is violating the obligations arising from the law or the articles of association.

• There should be a connection between the violation of the director's obligations and the resulting damage.

In accordance with Article 557 of the Turkish Commercial Code, if multiple individuals are collectively liable for the same damage, each of them is jointly and severally responsible for the damage with others to the extent that the damage can be personally attributed to their fault and the circumstances. However, according to the second paragraph of Article 557 of the Turkish Commercial Code, the plaintiff can jointly sue multiple responsible parties for the entire damage and may request the judge to determine the compensation debt of each defendant in the same lawsuit. Additionally, whether the director is a shareholder or not does not affect the liability.

According to Article 556 of the Turkish Commercial Code, in the case of bankruptcy of the limited liability company which incurred damages, the creditors of the company also have the right to request the payment of compensation to the company. However, the requests of shareholders and creditors of the company are first claimed by the bankruptcy administration. If the bankruptcy administration does not initiate the lawsuit, any shareholder or creditor of the company may bring the mentioned lawsuit. The proceeds are allocated, according to the provisions of the Enforcement and Bankruptcy Law, first to the payment of the claims of the creditors who initiated the lawsuit; the remaining amount is paid to the plaintiff shareholders in proportion to their capital shares, and the surplus is transferred to the increased bankruptcy estate.

It's important to note that LEGAL RESPONSIBILITIES OF DIRECTORS IN LIMITED LIABILITY COMPANIES can be complex and involve legal nuances. If you're considering filing a compensation suit in Turkey, it's strongly recommended to consult with a Turkish lawyer who can advise you on the specific details and ensure compliance with the TCC and your company's articles of association.