Effect of the Prohibition of Board Members of Joint Stock Companies from Participating in Negotiations (TCC 393) on Quorums

Abstract

Provision of TCC 393 which prohibits members of a board of directors from participating in negotiations on matters where the personal interests of themselves and their relatives’ listed in the law, and their interest outside the company, conflict with the company’s interests, and in our opinion from voting in a vote on the relevant matter, is not an absolute mandatory regulation. In this context, violation of this provision would not invalidate the board of directors’ resolution, but it only causes a compensation liability (TCC 393/2). Accordingly, if the prohibited member attends the meeting or casts a vote despite the prohibition, then such participation shall be taken into consideration in determining and calculating the meeting and decision quorums. However, in order to protect the behaviour of members who, in compliance with the prohibition, does not participate in discussion of the relevant agenda item and the voting, and in order not to make it disadvantageous to comply with the law compared to non-compliance, and to make it possible to resolve in such case, it would be an appropriate solution to drop the prohibited member or members who do not attend the meeting and cast a vote, from the meeting and decision quorum, and to calculate the quorums accordingly. Such prohibition and its consequences would also be fully applicable to the method of resolving through circulation within the scope of TCC 390/4, and it is mandatory to send the written resolution proposal to the prohibited member or members also, to resolve through such a method.