Supervision of the managers of a joint stock company

According to the Turkish Commercial Code (TCC) the board of directors is responsible for management, representation and supervision of the company. The duty of supervision is not explicitly regulated in the TCC. However, Article 375/1-e, which is about the duty of overall supervision, indicates that the board of directors is responsible for supervision. Moreover, Article 553/3 suggests that the board of directors cannot be held liable for violations of law or corruption that are beyond their control and this non-liability cannot be invalidated on the grounds of the obligation of supervision and care. This article also implies that the board of directors is obliged to supervise the management. According to Article 375/1-e, the duty of overall supervision is defined as "overall supervision of the persons entrusted with managing the company, in particular with regard to compliance with the law, articles of association, operational regulations and directives". In this regard, the duty of supervision is mainly about revision of activities and operations of managers in terms of compliance with the law. Still, the activities and operations of managers can also be reviewed in terms of expediency. Pursuant to Article 367, the board of directors can delegate its powers. Thus, the board of directors can delegate its power of supervision. However, the non-transferable duties of the board of directors cannot be subjected to delegation of management (TCC Art. 375). Because the duty of overall supervision is also a non-transferable duty, board of directors' responsibility for overall supervision will continue in case of delegation of management. It should be emphasized that the board of directors is not responsible for supervising management by itself but is accountable for establishing a control system and supervising this system. The one who will be responsible for supervision is the board of directors and the ones who will be supervised are "managers". While the board of directors is supervising the managers, it can get help from some legal mechanisms. To do so the board of directors may establish some internal systems (internal control, internal audit and risk management system), use its right to demand information and establish committees and commissions. If the board of directors do not exercise duty of supervision properly, it will be held responsible.