Turkey’s bosses want urgent revision of ‘risky’ draft law on company boards

Turkey’s bosses want urgent revision of ‘risky’ draft law on company boards

Turkey’s bosses want urgent revision of ‘risky’ draft law on company boards

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Turkish Business and Industry Association (TÜSİAD) has requested an urgent revision of a draft law broadening the government’s authority to appoint boards of trustees to companies, which it said was prepared without taking the views of all stakeholders, creating risks for companies’ reputation and private ownership rights. 

“This draft law needs to be reviewed thoroughly in terms of its potential risks, mainly over their business reputation and private property rights,” said TÜSİAD in a written statement on June 17. 

Harsh criticisms have also made by opposition parties, though lawmakers from the ruling Justice and Development Party (AKP) have robustly defended the changes.

Under the existing Code of Criminal Procedure (CMK) bill, boards of trustees can be appointed to a company during an investigation process if there is a “strong suspicion of crime” in the scope the company’s operations, in line with the law’s 133rd Article. With the new bill, the scope of the crimes that are subject to the appointment of trustees to a company will be extended in a dramatic manner. Trustees will be appointed to companies on grounds of “breaches of confidence,” “forgery,” “terror crimes” and crime activities defined in the 110th Article of the Capital Markets (SPK) Law, in addition to other crimes in the existing law such as drug trafficking and human trafficking. 

With the new 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. 

 “We believe that such a regulation, which will have direct and significant effects on all business activities of all companies in Turkey, should have been prepared with the participation of all regulatory authorities and the respective stakeholders in a long and thorough process. As such a process was not followed in the preparation of this regulation, it poses a number of serious risks,” said TÜSİAD.

It added that its concerns were shared with Prime Minister Binali Yıldırım, Deputy Prime Minister Nurettin Canikli, Deputy Prime Minister Mehmet Şimşek, Justice Minister Bekir Bozdağ and Economy Minister Nihat Zeybekci. 

Association defines risks in draft law

“First of all, the newly added crimes to the recent bill and the crimes defined in Article 133 of the CMK are quite different from each other. While crimes defined in Article 133 of the CMK are against public health, public security, public order and the state, others are against private property.  Crimes in the latter group are not against public interest, but against private interests … The inclusion of these crimes, which are covered by private laws, are against the proportionality and the conformability principles in terms of limiting basic rights and liberties, which are defined in constitutional law,” said TÜSİAD. 

The association also noted that the newly defined crimes, which are in the SPK Law as well as the 155th Article of the Turkish Criminal Code (TCK), cover a very broad range, creating a serious risk to business operations and property ownerships rights, which are clearly defined in the constitution. 

“The 155th Article of the TCK and the 110th Article of the SPK Law cover a wide array of conditions that are frequently faced in business life. When some extraordinary measures are taken for such conditions, in contrast to the core aim of these measures, many business activities will be negatively affected,” it noted.

With the new draft law, it will not be necessary for the authorities to wait until the completion of the related courts to appoint to companies that are allegedly committing a crime in the probe or interrogation process. 

“This will harm the right to property and pose huge risks for the economy. Besides, such practices will prevent private companies from making investments in Turkey,” added the association. 

TÜSİAD also claimed that the new draft law will create a dual structure in capital markets, damaging the integrity of the SPK, which can currently take a number of well-defined measures in cases of violations of the SPK Law.