Appointment of Trustees to Joint Stock Companies in Turkey
Introduction
A trustee is a manager appointed by court order to temporarily manage a person or institution. The primary purpose of a trustee is to ensure the company continues its operations, protect its assets, and prevent potential damage. The appointment of a trustee in joint-stock company is used as an important legal tool, particularly in cases of illegality in company management, lack of corporate bodies, risk of bankruptcy, or serious disputes between partners. The trustee continues the company’s operations, safeguards the rights of creditors and shareholders, and ensures that the company’s activities are conducted in accordance with the law.
Legal Basis for the Appointment of a Trustee
Although Turkish Commercial Code No. 6102 does not introduce a direct trustee regulation for joint stock companies, provisions regarding the appointment of trustees are available in Articles 403, 426/3, and 427/4 of Turkish Civil Code No. 4721. Therefore, in practice, the appointment of a trustee to joint-stock companies is generally resolved within the framework of the provisions of the Turkish Civil Code. Indeed, pursuant to Article 1 of the Turkish Commercial Code, the Turkish Commercial Code is an integral part of the Turkish Civil Code No. 4721, and in cases where there are no provisions in the Turkish Commercial Code, the provisions of the Turkish Civil Code apply.
The appointment of a trustee to a joint-stock company must be carried out by court order. These cases are of an absolute commercial nature as they directly concern the joint-stock company. The competent court is the district commercial court where the company’s headquarters are located. The court may appoint the trustee as a voluntary trustee, supervisory trustee, or administrative trustee.
Reasons for the Appointment of a Trustee
- Bankruptcy Situation
The appointment of a trustee is required if the company has gone bankrupt or if there are strong indications that it is heading towards bankruptcy. In this case, the trustee secures the company’s assets, protects the interests of creditors, and ensures that the bankruptcy process is conducted in accordance with the law. The trustee monitors the company’s activities during the bankruptcy process and takes measures to prevent loss of value.
- Conflicts of Interest within the Company
In the event of serious legal disputes arising within or outside the company, the court may deem it appropriate to appoint a trustee. The trustee assists in resolving these disputes, ensures the protection of the company’s assets, and guarantees the proper conduct of legal proceedings.
- Lack of Corporate Bodies
Article 427/4 of the Turkish Civil Code provides that if a legal entity suffers from a lack of corporate bodies and management cannot be ensured otherwise, the guardianship authority shall appoint an administrative trustee. The term ‘lack of corporate bodies’ here refers to the absence of the mandatory organs of the company.” In joint-stock companies, the mandatory corporate bodies are the general assembly and the board of directors.
- The absence of a general assembly occurs when the meeting that must be held at the end of each activity period is never held, the quorum for the meeting cannot be achieved, or decisions cannot be made on a continuous basis.
- Absence of a board of directors occurs when the general assembly cannot be convened, preventing the election of a board of directors, when the quorum required for the election cannot be achieved, or when the members of the board of directors collectively resign.
In such cases, a trustee must be appointed to ensure the continuity of the company and protect its interests. The trustee temporarily assumes the duties of the board of directors and prevents disruption to the company’s operations.
- Measures in Criminal Law
Pursuant to Article 133 of the Criminal Procedure Code, if there are strong suspicions that a crime has been committed within the scope of company activities and it is necessary to uncover the material truth, the judge or court may appoint a trustee to manage the company’s affairs. This measure aims to temporarily manage the company’s activities and ensure the proper conduct of the criminal proceedings.
Duty and Powers of the Trustee
A court order is required for a trustee to be appointed to a company. The order clearly specifies the type of trustee, their duties, and their powers. The trustee’s powers are limited depending on the reason for their appointment; they cannot replace the company’s organs and make decisions on their behalf. The appointment of a supervisory trustee does not remove the powers of the board of directors; the board of directors continues to perform its administrative and representative duties. If the trustee is appointed only for a specific task, their authority and duties are also limited to that task.
Conclusion
Appointment of a trustee to a joint-stock company is an exceptional and temporary measure. Its primary purpose is to prevent the dissolution of the company due to a lack of corporate bodies or a management vacuum. When appointing a trustee, courts should bear in mind that the primary objective is to ensure the continuity of the company; the trustee’s duties, authority, term, and fee should be clearly defined.The trustee should be prevented from continuously managing or representing the company. Trustee practices contribute to the lawful operation of joint-stock companies by protecting the company’s assets and the interests of its shareholders.