Assist. Prof. Dr. Kerem Çelikboya (Istanbul Bilgi University): Liability of Board Members in the Face of Unclear Legal Questions

About the Speaker:

Dr. Kerem Çelikboya is an assistant professor of commercial law at Istanbul Bilgi University Faculty of Law, where he teaches different aspects of corporate and commercial law. After graduating from Galatasaray University Faculty of Law in 2010, he completed his master’s degree at Galatasaray University with a thesis on “Transfer of Commercial Enterprise”. Afterwards, he obtained his doctoral degree from the same university with a thesis on “Shareholder’s Right to Dividend in Joint-Stock Companies”. Both dissertations have been published as books. He has various other publications on corporate law. He is also the author of a policy paper entitled "Enhancing Creditor Protection Through Solvency Test" to be published by the Global Relations Forum Young Academics Program.

Dr. Çelikboya was a visiting researcher at Max Planck Institute for Comparative and International Private Law in Hamburg between 2016 and 2017, where he concentrated both on preparing his master´s thesis for publication and on research for his doctorate dissertation.

About the Topic:

As the governing body of the joint stock company, the board of directors has a duty to comply with the law when making business decisions. Failure to comply with legal requirements will expose directors to liability for losses suffered by the company, which may take various forms, such as fines, penalties or payment of compensation. While it may seem straightforward to conclude that board members are inherently liable for losses suffered by the company as a result of the illegality of their decisions, the application of this approach may be more complicated in practice. Legal norms often contain uncertainties or ambiguities that require interpretation. In some cases, board members need to navigate uncharted legal territory, which is referred to as an unclear legal situation. As a result, directors cannot be fully certain of the legality of their decision at the time it is made. Such a determination is usually made ex post by a court or arbitration tribunal following a dispute. This uncertainty complicates the issue of board members´ liability.

The problem is exacerbated by increasing compliance requirements. Increasing regulation in areas as diverse as competition, data protection, sustainability reporting and supply chain due diligence is introducing stricter standards to comply with and higher fines, board members´ liability a more pressing legal issue.

The speaker will discuss whether existing regulations provide the desired balance between compliance incentives and sound corporate governance decision-making.

About the Seminar Series:
The seminar series “Current Research on Turkish Law” regularly invites outstanding scholars and practitioners working on different topics of Turkish private law to present and discuss their findings. The seminar series particularly aims to create a platform where both international researchers interested in Turkish law and Turkish researchers working on comparative law can come together and exchange scholarly ideas.