Draft law for more gov’t authority on company boards stirs debate in Turkey

Draft law for more gov’t authority on company boards stirs debate in Turkey

Draft law for more gov’t authority on company boards stirs debate in Turkey Opposition politicians and academics in Turkey have condemned a recent draft that broadens the government’s authority to appoint boards of trustees to companies, which they said will be used as a “political weapon.”

Harsh criticisms were made by deputies of the main opposition Republican People’s Party (CHP) and the Peoples’ Democratic Party (HDP), while lawmakers from the ruling Justice and Development Party (AKP) praised the changes.

“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 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 uses 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.  

With the new regulation, the partnership shares or administrative authorities of the assets and bonds of a company to which a trustee panel has been appointed will be transferred to the trustee.

Suggesting that the government wants to expand the areas where it can appoint trustees, Özel characterized the move as “very scary and dangerous” for the business world, capital markets and domestic and foreign investors.  

“This is a move that doesn’t fit the realities of democracy, law and realities of business life,” he also said, adding that AKP threatens the business world with trustees in order to make them the party’s allies. 

Another criticism came from HDP deputy Meral Danış Beştaş, who said that with the new regulation the higher judiciary is being “destroyed” in an anti-constitutional way. 

“The government has been operating with coup practices for a long time. Turkey shelved democracy a long time ago. Preparations are being made to deliver the whole of Turkey to a trustee,” Beştaş said. 

Academics have also criticized the expanding of the authorization, with Professor 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 Professor Devrim Güngör also stressed that one of the main problems in Turkey at the moment is the misuse of trustee appointments to seize companies. 

However, AKP Deputy Parliamentary Group Chair Bülent Turan has defended the code, saying it “fulfills a deficiency.”

“Trustees can be appointed to carry out company business if there are strong doubts. In the new regulation, the authorities of partnership shares can also be transferred to trustees,” Turan said.