The authority to manage and represent joint-stock companies lies with the board of directors. Accordingly, the responsibility for the administration and representation of the company also rests with the board of directors. Pursuant to Article 553 of the Turkish Commercial Code, board members may be held liable to the company, shareholders, and creditors if they negligently violate their legal obligations and those stipulated in the company’s articles of association.

1. Legal Consequences of the Release Decision

A release decision by the general assembly signifies the approval of the board members’ activities and transactions for a specific fiscal period. This decision prevents the company from filing a compensation claim against board members for the relevant period. The release decision also removes the right to initiate a lawsuit for shareholders who voted in favor of the release and for those who acquired shares with knowledge of the decision. However, other shareholders retain the right to file a lawsuit within six months from the release date. On the other hand, the release decision does not affect the rights of company creditors to file lawsuits.

2. Explicit and Implied Release

Release may be granted through an explicit decision by the general assembly or through the approval of the financial statements for the relevant fiscal period. The general assembly may also choose not to release board members, either by explicitly deciding against release or by simply omitting the release issue from its agenda. If the general assembly issues a decision not to release the board members, they have the right to file an annulment lawsuit, arguing that the decision is contrary to the law, the articles of association, or the principle of good faith.

3. Right of Board Members to File a Release Lawsuit

Although there is no explicit provision in the law, legal doctrine and judicial precedents recognize that board members may file a lawsuit against the company if their release is unjustly denied. If board members face the threat of liability lawsuits or reputational damage, they may be deemed to have a legitimate legal interest in seeking a release decision. Accordingly, board members who are denied release by the general assembly may initiate legal proceedings, claiming that they fulfilled their duties in accordance with good faith and diligence.

4. What Happens When the General Assembly Does Not Address Release?

If the general assembly does not include the release issue on its agenda and fails to make any decision on it, legal uncertainties may arise. Some legal scholars argue that board members should still be entitled to file a release lawsuit, based on the obligation of joint-stock companies to hold an annual general assembly and to address the release issue in its agenda. However, according to the Court of Cassation, a board member may only file a release lawsuit if the general assembly explicitly decides against the release.

5. Time Limits for Filing a Release Lawsuit

If the general assembly decides not to grant release, board members may file an annulment lawsuit within a three-month peremptory period. However, since a release lawsuit is considered a negative declaratory action, board members are not subject to a specific time limit to file such a case. In other words, as long as the legal uncertainty persists, board members may initiate a release lawsuit.

In some decisions, the Court of Cassation has drawn a link between release lawsuits and liability lawsuits. It has ruled that if the statute of limitations for filing a liability lawsuit has expired, there is no longer a risk of a lawsuit being brought against the board member, and thus, the board member no longer has a legal interest in pursuing a release lawsuit.

6. Conclusion

Although there is no explicit legislative provision, judicial precedents and legal doctrine acknowledge that board members may file a release lawsuit if they have a legitimate legal interest. The Court of Cassation evaluates these lawsuits based on the presence of a legal interest. Therefore, before filing a release lawsuit, a board member must clearly demonstrate their legal interest in the case.