Management organization in stock companies and preparing of internal directive

Preperation of Internal directive concept is a new institution in Turkish law which was transferred to Turkish Law with respect to SwissCode of Obligations. By providing an internal directive based on article 367 of Turkish Commercial Code provide an order for management organization, clarify duties and responsibilities of the persons who are being in management organization, transfer management and representation powers to other parties if there will be a requirement about this issue. I would like to state that, if there is not a transfer of the duties in companies, as a rule companies are directed by board of the directors. However, the law permits transfer of the authorities if necessary conditions are provided. These conditions are; adding an article of association clause which provide transfer of the authorities and preparing an internal directive. Transfer of the management is an exception concept. Therefore if the management authorities are not transfered to third parties the board of directors should manage the company. On the otherhand Turkish Commercial Code seperate the powers of management and representation. It is possible to transfer all the management powers to third parties however all the representation powers can not be delivered to third parties. In this regards, there is a limitation in terms of transferring representation authorities. The law require that at least one member of board of directors should have the representation power. Forming committees in board of the directors is an important issue in terms of distributing the duties in the company. In order to set up committees in the board of the directors, there is no need of adding a clause to article of association of the company which provides transfer of the authorities and there is no need in terms of preparing an internal directive. The concept of forming committees is under the discretion of the board of the directors. One of the most important results of transferring of management and representation authorities to third parties is; it also provides transfer of the responsibilities. As a rule if there is a transfer of management and representation authorities by preparing an internal directive, it provides transfer of the responsibilities. However according to legislation; if there is a transfer of management and representation auhorities to third parties, the board of directors will be responsible for the duties which results from untransferable duties provided by the law and providing necessary duty of care in terms of nominating of the persons who deliver the management and respresentation authorities.