Corporate Board Crises & Remedies at Turkish Joint Stock Companies

Dr. Umut Metin

Corporate boards may face different types of disputes and/or internal conflicts. These disputes may evolve into board crises. As the crisis deepens, board members and the board itself could have difficulties in fulfilling their duties. Moreover, a step further from the crisis, corporate board might even be locked. Conflicts of interest among joint stock companies’ (JSC) shareholders are known as the most common source of the crisis and/or deadlock. In event of a deadlock situation, corporate board cannot hold board meetings and/or make board resolutions anymore.

The deadlock of the corporate board, may lead the entire company to be locked down. The company may face the risk of dissolution. For this reason prudential measures should be stipulated in the company’s articles of association (AoA) against the risk of board crisis and/or deadlock. The one-person corporate board model and support of advisory committee to corporate board is the model we recommend against the risk of dead-lock. Legal texts such as AoA, shareholder agreements, family constitutions (for family companies) should include measures regarding deadlock. If such measures are not sufficient to avoid or/and break the deadlock, Alternative dispute resolution methods should be regarded as the first stage of external intervention. Effective settlements can be achieved via mediation process against deadlock situations.

Key words: Crisis, Deadlock, Board of Directors

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