Draft bill expands legal shield of trustees appointed to companies

Draft bill expands legal shield of trustees appointed to companies

Draft bill expands legal shield of trustees appointed to companies

DHA photo

A recent controversial draft bill will expand the legal shield given to the boards of trustees appointed to companies and enable them to have broader authority, a comparison with the existing law and the draft has shown, as opposition deputies and academics voiced their disapproval. 

Main opposition Republican People’s Party (CHP) and Peoples’ Democratic Party (HDP) deputies harshly criticized the draft on the ground the new bill would give the government broader authority to seize even economically sound companies with political motives, while lawmakers from the ruling Justice and Development Party (AKP) praised the changes. 

In a response to rising criticism about the bill, Customs and Trade Minister Bülent Tüfenkçi said on June 16 that the state already had the authority to seize any company it wanted, but the point was to relieve the hands of the boards of trustees. 

“The appointment of trustees is a legal precaution that should be aimed at protecting the public, companies, shareholders and citizens via preventing the bankruptcy of companies and allowing them to continue their commercial activities. But the AKP has been using trustees as a political weapon for a while now,” CHP deputy group chair Özgür Özel said, adding that the AKP used board appointments to “intimidate.” 

“We’ve seen economically sound companies be seized and discharged with political motives, sometimes in the name of the struggle against the ‘parallel structure,’ sometimes for other reasons,” Özel added, referring to the appointment of trustees to companies and media outlets with links to the movement of U.S.-based Islamic scholar Fethullah Gülen, an ally-turned-foe of the AKP government and President Recep Tayyip Erdoğan.  

What does the new bill bring?

With the recent bill, the 133rd Article of the Code of Criminal Procedure (CMK), which regulates the appointment of trustees to companies, is planned to be revised. According to the existing 131/1, a judge or court can appoint a board of trustees to any company, but with the recent bill, the scope of this authority will be extended, as the partnership stakes or stock management of seized companies will also be transferred to the trustees. 

With the new bill, the scope of the crimes which are the subject of the appointment of trustees to a company will also be extended. Trustees will be appointed to companies on grounds of “breach of confidence “and “forgery” in addition to other crimes in the existing law, such as drug trafficking and human trafficking. 

The existing law stipulates that seized companies can demand compensation from the trustees for their losses. The recent bill, however, notes that such lawsuits can be opened against the state, but not against a board of trustees. 

Academics have also criticized the expanding authorization, with Prof. Köksal Bayraktar of Istanbul’s Yeditepe University saying the state interfering in commercial life would bring significant “dangers.” 

“The regulation, which aims to shrink the Supreme Court of Appeals and the Council of State, is dangerous and mistaken in many ways,” Bayraktar said. 

Ankara University Associate Prof. Devrim Güngör stressed that one of the main problems in Turkey at the moment was the misuse of trustee appointments to seize companies.