Recent corporate governance developments in Turkey



The importance of corporate governance has been increasing in Turkey’s business environment. Legislative movements were started by the Turkish Capital Markets Board (CMB) in 2003 and the first Corporate Governance Principles were published based on the OECD Corporate Governance Principles. However, they have undergone many changes in order to keep track of global developments.

The ‘comply or explain’ approach, adopted for the first corporate governance principles, has also changed and some of the corporate governance principles became obligatory upon enactment of the Corporate Governance Communiqué in 2011.

The Turkish Commercial Code No. 6102 which came into force on 1 July 2012 (TCC), underlined that corporate governance provides better, transparent and fair management, thus ensuring accountability and responsibility. Thanks to this new approach, the corporate governance principles, which were initially applicable to public companies, are currently applicable to non-public companies as well.

Accordingly, the TCC introduced provisions to ensure full transparency in financial statements and annual reports. Within this scope, it has become obligatory to maintain individual or consolidated financial statements in compliance with Turkish Accounting Standards and Turkish Financial Reporting Standards, adapted from the International Financial Reporting Standards.

The TCC brought an independent audit system and required companies to fulfil certain conditions to assign independent auditors. Furthermore, companies subject to independent audits must create a website and allocate a section thereof for the announcements required to be made under the law. This part of the website must be open to public access as a part of information society services.

Early detection of risk committees is another novelty introduced by the TCC. Companies whose stocks are traded on a stock exchange are obliged to establish a committee for the early detection of risk. For other companies, such committees must be established if deemed necessary by the auditor. The committee must prepare a report every two months, where the risks and possible solutions are noted.

The TCC attaches a particular importance to the accountability of company management and enables companies to distinguish between executive and non-executive members by transferring their duties partially or in whole, to one or more of its members or third party managers. Liability provisions have been regulated accordingly and the fault liability principle has been adopted. According to this principle, a board member may be held liable only if fault or negligence is attributable to him or her.

The rights of the minority shareholders have also been enhanced. They have been granted new rights such as requesting the appointment of a special auditor or requesting liquidation of the company based on just cause.

Finally, the TCC established a provision regarding corporate governance of public companies and granted the CMB with broad powers to regulate this area.

Following the TCC, a new Capital Markets Law entered into force on 30 December 2012 and authorised the CMB to appoint independent board members under exceptional circumstances, classify the companies being subject to corporate governance principles, establish mandatory rules for compliance with the principles and take necessary measures in case of non-compliance.

In light of these developments, the CMB enacted the Corporate Governance Communiqué (New Communiqué) No. II-17.1 on 3 January 2014. In parallel with the previous system, the New Communiqué has made some of the corporate governance principles mandatory, whereas others continue to be applied on a ‘comply or explain’ basis.

The corporate governance principles have been regulated as an annex of the New Communiqué and mandatory and advisory provisions are listed in Article 5 of the New Communiqué. While retaining key principles of the previous system, the New Communiqué has introduced many new principles. Some of these new principles will be analysed below.

Principles regarding general assembly and shareholders’ rights

In Turkey, the controlling shareholder structure (e.g., family controlled companies) is very common, even for public companies. Therefore, principles protecting the rights of the minority shareholders are needed to ensure better corporate governance. The New Communiqué has taken an important step to ensure the transparency of a company’s activities and increase the effectiveness of general assembly meetings in terms of use of minority shareholders’ rights.

The New Communiqué requires the establishment of an ‘Investor Relations Department’ to ensure communication between companies and investors. Responding to the written information requests of shareholders and preparing general assembly documentation for shareholders’ review are among the main duties of this department.

Furthermore, the New Communiqué stipulates detailed rules regarding general assembly meeting procedures. The invitation process and date of the general assembly have been regulated in detail. All shareholders have been granted with the authority to ask all types of questions and express their opinions during the meetings and the chairman of the meetings must answer their questions.

Principles regarding board of directors

In an effort to increase the board’s effectiveness, the New Communiqué has made amendments to the number of independent board members and the criteria to be elected as an independent board member.

According to the new rules, a majority of the board’s members must consist of non-executive members. The number of independent board members cannot be less than one-third of the total number of board of directors. However, in any case, the number of independent board members must not be less than two.

The New Communiqué brought new criteria for being an independent board member. Pursuant to the new criteria, the same person cannot be an independent member of the board of directors in more than three companies which are controlled by the company in question or by controlling shareholders thereof, and same person can be elected as the board member of a maximum of five companies traded on the stock exchange.

Another innovation relates to the number of female board members. Pursuant to the New Communiqué, companies must determine a target rate for female board members, provided that it is not less than 25 percent. It should be noted that this is not an obligatory rule, but a ‘comply or explain’ principle. The CMB pays strict attention to compliance with the rules concerning independent members and takes measures to ensure compliance. Indeed, by the authority vested in it by the Capital Markets Law, the CMB appointed independent members to the board of Turkcell İletişim Hizmetleri A.Ş. which did not fulfil its relevant obligations in 2013.

Measures to be taken by the CMB

In case of non-compliance with the principles, the CMB is authorised to take decisions ex officio which are aimed at fulfilment of the compliance liability and to take actions to that end. The CMB is also authorised to apply to the court to ensure compliance with the principles. As the CMB is authorised to take decisions to ensure compliance, it will not need to apply to the court in most cases; instead, it will be authorised to make its own decisions. Therefore, the CMB may undertake fast and effective measures without being involved in court actions.


Legislative movements regarding corporate governance rules in Turkey have gained momentum in the last few years. Companies must pay greater attention to comply with these rules, given that these principles will grow in importance for good company management.


Pelin Baysal is a partner, Filiz Toprak Esin a managing associate and Selin Basaran an associate at Gün + Partners. Ms Baysal can be contacted on +90 212 354 0000 or by email: Ms Esin can be contacted on +90 212 354 0000 or by email: Ms Basaran can be contacted on + 90 (212) 354 00 53 or by email:

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Pelin Baysal, Filiz Toprak Esin and Selin Basaran

Gün + Partners

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