The Effects of the Powers of the General Assembly on the Representation of the Joint Stock Company
As a rule, the body authorized to manage and represent a joint stock company is the board of directors (TCC Art. 365). The concept of “management” covers all business and operations carried out by the board of directors, both internally and externally. Representation transactions correspond to the reflected part of the management transactions at the same time. In the case of a representation transaction, the discrimination is made between “whether the board of directors can get the company into debt to the outside” and “whether it is allowed to do this transaction in an internal relationship” in terms of this transaction. This distinction, which is described as “representation ability” in the first case and “power of representation” in the second case, is a distinction complimented by many authors both in Swiss and German law and in Turkish law. According to this distinction, the scope of representation capability shows to what extent the board member can put the company under debt in foreign relations; The scope of the power of attorney answers the question of whether the transaction is permissible in internal relations. The scope of representation is often wider than the scope of representational power; Consequently, the fact that the transaction is not permissible in the internal relationship does not mean that this transaction will not bind the company in the external relationship.
The business subject of the company, as it can be seen below, is not the representation capability of the board of directors; It has become the limit of representation power. Therefore, the scope of the representation ability of the members of the board of directors has been regulated extremely broadly by the Law. However, like every authority, this has some limits arising from the law. Among these limitations, those that are important in terms of our subject are the decision and approval powers that are recognized by the general assembly by law and affect the external relations by limiting the representation ability of the board of directors. The decision and approval powers granted to the General Assembly have been regulated in a manner that will also affect the external relations in some cases. For this reason, these constitute a legal limit in terms of the representation ability of the board of directors. In cases where the decision and approval powers of the general assembly limit the representation ability, TCC Art. The provision 371/4 does not provide protection for third parties.
TCC Art. In 371/4, there is the provision that “the transaction made by the persons authorized to represent is against the articles of association or the decision of the general assembly, does not prevent third parties with good will from applying to the company for that transaction”. In cases where the representation capability is limited by law by granting approval and decision authority to the general assembly, it is not possible for third parties to rely on this regulation. Because the fact that the representation ability is not restricted cannot be interpreted in a way that allows transactions that are incompatible with the law. In addition, as can be seen below, these situations, which are defined as the limits of representation ability, are sometimes also considered as the basic principles of joint stock company law.