Joint stock companies (JSC) and limited liability companies (LLC) are the preferred entity types for conducting commercial activities in Türkiye. They are both so-called “capital companies”, in which the shareholders are (save for specified exceptions) not liable for the company’s debts and are hence limited to their capital commitments.

There most notable exceptions to this rule are (i) some provisions allowing the lifting of the corporate veil, most prominently in the section of the Turkish Commercial Code (Law No 6102 or TCC) regulating company groups and affiliation, under Articles 202, 206 and 209; and (ii) solely in the case of LLCs, the shareholders’ liability for unpaid public debts of the company.

An LLC is easier to maintain than a JSC and is set to be the more common legal form, whereas a JSC is intended for companies that aim to be or already are listed on a stock exchange. However, due to historic reasons (namely the impracticability and inflexibility of the rules applying to LLCs before 2012), JSCs are disproportionately popular in Türkiye.

Even today, a JSC is still preferred in cases where shareholders with potentially conflicting interests come together, such as in a joint venture. Also, in a number of sectors (such as banking, insurance and financial leases) only JSCs can operate.

The LLC would be more suitable when a simple and fully owned structure is desired.

The TCC is the main source, setting out the general rules applying to companies at the highest level. It is accompanied by an extensive set of secondary legislation (regulations, directives, and communiques issued by the Ministry of Trade) setting out further details mostly relating to the practical implementation of the principles under the TCC.

There is a second law that sets specific additional rules for so-called “public companies”: the Capital Markets Law (Law No 6362). Public companies are (i) companies publicly traded on the stock exchange (listed companies) and (ii) companies that have more than 500 shareholders. The most prominent piece of secondary legislation applying to public companies is the Corporate Governance Communiqué numbered II-17.1 issued by the Capital Market Board (the “Communiqué”). With that said, secondary legislations and announcements of both the Turkish Capital Markets Board (CMB) and the Borsa Istanbul (Istanbul Stock Exchange) also regulate corporate governance requirements.

Corporate governance principles applying to listed companies are mainly regulated under the Communique. The Communique includes both mandatory requirements and non-mandatory requirements. Mandatory requirements are only imposed on listed companies. The exact requirements that are mandatorily applied to a company depend on its so-called “corporate governance group”. This in turn is determined by the CMB by taking into account the company’s market value and market value of free-floating shares.

Examples of some mandatory requirements are:

• establishing an investor relations department;
• appointing a certain number of independent board members;
• establishing certain committees such as the audit committee, the corporate governance committee, and the early detection of risks committee;
• disclosing certain policies such as the remuneration policy for board members and executives;
• adhering to limitations imposed on related-party transactions; and
• adhering to limitations imposed on the establishment of pledges, or the granting of guarantees, on assets owned by listed companies.

Examples of non-mandatory principles that can be followed are:

• adhering to sustainability principles;
• not appointing the same board member to more than one committee; and
• providing, in the articles of association of the company, for clear separation between the authorities of the chairman of the board of directors and those of the chief executive officer.

Following these principles is voluntary, but non-compliant companies must provide an explanation in their annual corporate governance compliance reports for not doing so.

In addition to corporate governance requirements regulated under the Communiqué, both public and non-public companies that have issued capital markets instruments except shares to the Turkish market must make certain public disclosures. Public disclosure requirements are regulated under the Special Events Communique numbered II-15.1.

In Türkiye, regulatory updates and compliance measures are tailored to address the country’s unique economic challenges and conditions, including managing economic volatility. Significant efforts have also been made to align the country with the EU’ Green Deal. Strides have been taken on the digital transformation front, including the “National Technology Move,” which aims to boost technological innovation and self-sufficiency, and various e-government projects aimed at modernising public services and enhancing digital governance. Additionally, efforts to improve board diversity and inclusion, such as increasing the representation of women and minorities on corporate boards, are designed to reflect Türkiye’s specific cultural and social norms. Lastly, impact investing is becoming a hot topic amongst Turkish venture capital and capital markets circles.

While there is no explicit legal framework for ESG reporting, many companies voluntarily adopt international standards, such as those of the Global Reporting Initiative or Sustainability Accounting Standards Board, to enhance their credibility and transparency. For listed companies, sustainability principles were published by the CMB, although compliance with the same is not mandatory. Listed companies must, however, disclose in their periodic corporate governance reports whether they adhere to the sustainability principles and explain the reasons if they do not. In addition, Türkiye has seen a growing trend towards increased awareness and voluntary adoption of international ESG standards among companies, driven by investor pressure and evolving global sustainability initiatives.

A JSC is managed by its board (consisting of one or more directors) whereas an LLC is managed by one or more managers (ie, a board of managers). In each case these individuals/bodies are appointed by the shareholders.

Turkish company law follows a two-tier system. Accordingly, the management is placed in the hands of the board or the managers (depending on the company type), whereas shareholder matters are decided by the other mandatory body – ie, the “general assembly”. Each one of these bodies (management and shareholders) is endowed with a certain set of non-delegable powers and duties, constituting of a core set of powers and duties that can neither be moved from one to the other, nor transferred to another (voluntarily established) subcommittee, body or third (external) person.

Depending on whether companies meet the criteria determined under Decree 634 on Determination of Companies Subject to Independent Audit, an independent auditor may also have to be appointed to the company.

The board carries out all duties and actions whose competence is not explicitly granted to the general assembly by law or by the articles of association of the company. Meanwhile, the general assembly only acts on matters determined in the legislation and the articles of association of the company.

The management power belongs to all board members unless delegated.

Reserved Matters

According to the TCC, there are non-delegable powers vested in the board and general assembly of a JSC and LLC.

Board

Directors and managers of JSCs and LLCs cannot assign or waive some duties and authorities, including those that relate to the high-level management of the company, the oversight of accounting and financial auditing, the supervision of those who are authorised to manage the company, the formation of risk detection committees, etc.

General assembly

The general assembly of a JSC and LLC cannot delegate certain duties, including the amendment of the articles of association of the company, appointment and dismissal of directors and managers, determining their terms, remuneration and release, approving significant transactions (such as mergers, demergers or company type transformations), and introducing or amending privileges granted to shares.

For public JSCs, there are additional matters reserved for the general assembly such as approving related-party transactions not approved by the majority of the independent board of directors and determining the upper limit of donations that can be made by the company.

General assembly meetings are called by the board, which determines also the agenda items to be discussed by the general assembly. But, with the approval of the shareholders present at the meeting, other items may be added to the agenda.

Please also refer to 5.3 Shareholder Meetings regarding the conduct of general assembly meetings.

General Assembly of a JSC

Unless a higher quorum is stipulated under the articles of association, a simple majority of the votes will be sufficient to control the decision-making process of the general assembly of a JSC for most purposes. The TCC contains a limited number of super majority requirements for general assemblies. It is of course possible to tailor the articles of association to expand the list of super majority decisions or provide for higher quorum and voting requirements than those set forth in the TCC. The requirements set forth in the TCC can be made more stringent, but they cannot be made more lenient.

Under the TCC, quorum and voting requirements regarding the amendments to the articles of association are divided into four categories:

• Amendments to the articles of association aimed at (i) an increase of capital and increase of value of the upper limit of the registered capital; or (ii) a merger, demerger or change of legal form, require the presence of shareholders holding at least 25% of the share capital and can be adopted with the simple majority of the shareholders present in the General Assembly.
• Ordinary amendments of the articles of association require the presence of shareholders holding 50% of the share capital and must be adopted with a simple majority of votes represented in the general assembly meeting.
• Amendments to the articles of association concerning (i) a complete change of the field of activity of the JSC; (ii) issuance of privileged shares; or (iii) introducing restrictions to the transfer of registered shares, must be adopted with affirmative votes of the shareholders representing at least 75% of the share capital (present or not).
• Amendments to the articles of association concerning (i) a change in the nationality of the JSC (ie, moving it outside of Türkiye); or (ii) imposing obligations on the shareholders other than capital contributions (ie, for the recovery of balance sheet losses or otherwise), must be adopted with the unanimous vote of all shareholders (present or not).

Notwithstanding the foregoing, where there are different classes of shares in a JSC, any decision which adversely affects the rights of shareholders holding a specific class of shares will also need to be approved by a special assembly of such shareholders. At least 60% of the share capital representing the privileged shares must be present at such a special assembly meeting.

General Assembly of an LLC

Unless provided otherwise in the articles of association, all general assembly resolutions must be adapted with a majority of the votes represented in the general assembly meeting. Therefore, the general rule in general assembly meetings of LLCs is that there is no quorum to convene the general assembly.

The following important decisions must be taken with (i) at least a two-thirds majority of the votes represented in the general assembly meeting and (ii) the majority of the votes representing the share capital:

• change of the field of activity;
• issuance of shares with privileged voting rights;
• restriction, prohibition or facilitation of share transfers;
• increase of capital;
• limitation of pre-emption rights;
• change of the registered address;
• approval by the general assembly to the activities of the shareholders or managers violating non-compete or loyalty obligations;
• bringing a lawsuit for dismissal of a shareholder on valid grounds and dismissal of a shareholder due to a reason stipulated in the articles of association; and
• dissolution of the company.

The general assembly decisions regarding the following items must be taken with the unanimous votes of the shareholders:

• introduction or increase of additional payment obligations or secondary performance obligations; and
• amendments which introduce to the articles of association a reason for the dismissal of shareholders.

A lesser quorum cannot be set forth in the articles with respect to the foregoing decisions. However, a higher quorum requirement than stipulated by the TCC may be set forth in the articles of association.

Board of a JSC

Unless stated otherwise in the articles of association, the board shall convene with the majority of the number of directors and adopt resolutions with the majority of the directors present at the meeting. The articles of association cannot provide a quorum lower than stipulated in the TCC. Specific quorum and majority requirements for the Board may be provided for in the articles of association.

Proxies are not allowed, but it is possible to pass a resolution without convening a meeting unless any of the directors requests a formal meeting. The board may approve the resolution separately, and signatures of the directors do not have to be on the same sheet.

Board of an LLC

The board of managers shall adopt resolutions by a majority vote unless otherwise provided in the articles of association. The chairman has the tie-breaking vote. A different voting system for the board of managers can be set forth by the articles of association. Please refer to 4.2 Roles of Board Members regarding the details of the details of convening a board meeting.

The board (of directors in a JSC and of managers in an LLC if any) consists of a chairperson, a deputy chairperson, and the remaining members. Listed companies are required to have a certain number of independent board members.

The chairperson does not have a superseding power in a JSC, whereas if an LLC has more than one manager, the chairperson has the tie-breaking vote (if not determined otherwise in the articles of association of the LLC).

Board members carry out the management function of the company as a whole. The main distinction between the members is the authority of the chairperson (and deputy chairperson) to call the board to a meeting.

Board meetings are in principle called by the chairperson (or in their absence the deputy chairperson). However, each board member can request a meeting in writing from the chairperson. The chairman must convene the meeting if the request is deemed appropriate. If the request is made by the majority of the board members, the chairperson has no such discretion and must convene the meeting within 30 days. If the chairperson or vice chairperson fails to convene a rightfully requested meeting, the requesting members can directly convene the meeting.

The board may delegate all of its delegable authority or a part of it to one or more directors or a third person with an internal directive if the articles of association of the company contain a provision allowing this. Management authority belongs to all the members of the board, taken in their entirety, unless specific arrangements and delegations are made.

The boards of JSCs and LLCs can have one or more members. For an LLC, at least one shareholder must be a manager (and thereby a member of the board). There is no such requirement for the board of a JSC.

Listed companies are required to have at least five board members. At least half of the board must consist of non-executive board members. One third of the board of directors of a listed company must consist of independent board members. Independent board members are also deemed non-executive board members. However, depending on the corporate governance group of the company or whether an exemption is granted by the CMB for the specific company, having only two independent board members regardless of the head count of the board of directors may suffice.

The board members may be foreign or Turkish nationals, and legal entities or real persons. The number of members on a board may be even or odd. Board members do not need to be employees of the company, but they can be.

For companies operating in specially regulated sectors, such as banking, the minimum number of, and other requirements for, board members can be specifically set out in the related legislation. Therefore, each company’s board structure must be determined in compliance with the related applicable legislation.

At incorporation, the initial board members must be appointed by being named in a temporary article of the articles of association.

Board members (and managers) are appointed and removed by the general assembly, at the latter’s full discretion. However, if a board member of a JSC resigns, assuming that the remaining members still constitute a quorum for the board to take decisions, such remaining members can appoint an interim member, whose appointment would be approved and made permanent at the next general assembly meeting.

Appointment of independent board members in listed companies follows a different procedure. Independent board members must fulfil certain independence criteria. The nomination committee identifies candidates suitable for independent board members and submits them to the board of directors. If the board of directors approve the names, it then submits the proposed names to the CMB for comment. If the CMB does not disapprove of the names, the proposed independent board members may be appointed by the general assembly.

If a legal entity is appointed as a board member (or manager), it must designate one natural person representative to act on its behalf. The representative will be registered with the Trade Registry.

Generally, anyone may be appointed as board member. But some negative qualification criteria do exist (such as not being insolvent or incapacitated). Also, the board members of companies acting in specific, regulated sectors, such as payment institutions and banks, must fulfil specific criteria set out under the related legislation (such as specific higher education achievement or not possessing a criminal record).

Standard Board Members

The board members of a JSC are prohibited from:

• participating in deliberations concerning matters in which a conflict of interest exists between themselves or their relatives and the company;
• entering into transactions with the company in their own name or on a third party’s account without obtaining the permission of the general assembly;
• becoming indebted to the company in cash. (unless they are shareholders); or
• compete with the company, unless the general assembly gives its consent to the otherwise.

Board members of an LLC, are prohibited from engaging in activities which compete with the company, unless provided otherwise in the articles, or if all shareholders consent in writing.

For listed companies, in the event that controlling shareholders, board members, executives, and their close relatives engage in a significant transaction that may cause a conflict of interest with the company, such transactions must be recorded in the general assembly minutes. The same requirement applies if the board members conclude business transactions or enter into partnerships falling into the company’s field of activity.

Independent Board Members

Furthermore, an independent board member in a listed company must meet certain criteria to ensure impartiality and ability to act in the best interests of the company and its stakeholders. Most prominent amongst these independence criteria are:

• no employment or significant ownership ties to the company, its controlling shareholders, or related entities within the past five years;
• no significant commercial relationships with the company or related entities within the past five years;
• possessing the necessary education, knowledge, and experience to fulfil their duties effectively;
• not working full-time in public institutions, except for university faculty positions;
• being a resident of Türkiye;
• demonstrating strong ethics, possessing a professional reputation, and having the ability to maintain impartiality in conflicts of interest;
• having sufficient time to dedicate to the company’s business and fulfil their responsibilities;
• serving on the company’s board for no more than six years within the past decade;
• serving as an independent board member on no more than three companies controlled by the same shareholders and no more than five public companies in total; and
• not being registered as a board member representing a legal entity.

A board member has the following obligations stipulated by law, for both JSCs and LLCs:

• the duty to act diligently;
• the duty of loyalty;
• the duty of equal treatment of shareholders under equal circumstances;
• convening a general assembly when a significant portion of the share capital is depleted; and
• establishing a committee for early determination and management of risks.

Additional obligations may be imposed on the members of the board by the articles of association.

Please also refer to 3.2 Decisions Made by Particular Bodies.

The directors in JSCs and managers in LLCs are primarily responsible towards the company. While there are ways for shareholders and creditors to enforce direct claims against them, this occurs as an extension of their duty of loyalty towards the company itself. In other words, the possibility of making such claims does not establish a direct duty of loyalty towards shareholders or creditors. In the context of group companies, claims can be made by additional parties (for example the shareholders or creditors of the company’s subsidiary), but these also do not construct a direct duty of loyalty.

In JSCs that have issued capital markets instruments (which includes any listed companies), the board of directors is responsible for preparing accurate financial tables and reports. Board members responsible for preparing financial tables and reports must provide an undertaking to guarantee the truth and accuracy of the financial tables and reporting.

Other officers are mere employees and are liable only to the company and under their employment agreements.

If a director faultily breaches their obligations under the law or the articles of association and causes damage to the company, the company itself, its shareholders or creditors of the company may bring an indemnity claim against such director.

For companies that have issued capital markets instruments (other than shares), investors in such capital market instruments may bring claims against directors even though they are not shareholders.

If listed companies do not adhere to the corporate governance requirements, the CMB is authorised to adopt resolutions andtake the necessary steps to enforce adherence to the corporate governance rules. If the board of directors or the general assembly of a company do not follow the CMB’s instructions to achieve compliance with the corporate governance requirements, although the board of directors has sufficient members to resolve on such points within the 30-day grace period to be provided by the CMB, the CMB may appoint a sufficient number of independent board members to adopt necessary resolutions and take the steps necessary to achieve compliance with corporate governance rules.

In addition, if a public company incurs losses five years in a row, all privileges granted to shares in terms of voting rights and representation at the board of directors can be removed by the CMB.

For some breaches of law, the administrative fines can be enforced by the local authority and even imprisonment is threatened (even though the latter is not generally enforced).

The legal representatives of a JSC (including the directors and other officers with the power to manage and represent the company may be held personally liable if a JSC does or cannot pay its tax debts.

In companies that have issued capital markets instruments, the board members may also be held liable for statements provided under the prospectus or issuance certificate and the true and accurate reporting of financial information.

Any liability by a director (or manager) requires a faulty action leading to damages. Therefore, if damages are not caused by the fault of the concerned director or manager, such person cannot be held liable.

If a management function is partially or completely delegated, the board will be released from liability to the extent of the delegated function. However, directors will be held liable if they have not selected or fail to monitor the relevant person with due care.

The liability of a present or former director or officer can be terminated either by an explicit release by shareholders’ decision or through shareholder approval of the company’s annual report and financial statements.

Directors and managers of a JSC and an LLC may be paid a special remuneration (called honorarium) if this is approved by a general assembly resolution. This is a non-delegable power of the general assembly. Other financial benefits (dividend shares) paid to directors will be subject to the same restriction, but if the relevant person is employed at the company, salaries so received will not have to be approved by the general assembly.

Without a valid general assembly resolution, the honorarium payments to the board members will not be lawful and could be reclaimed by the company. Also, the shareholders and creditors could file a damages claim. Finally, there is a risk of such payments being qualified as salaries by social security institutions, which could treat this as an evasion of social security payment obligations.

Listed companies have a remuneration policy, prepared by the remuneration committee and adopted by the board of directors of the public company. On the basis of this policy, the remuneration committee and the board of directors make suggestions for the remuneration of the board members to the general assembly. The general assembly ultimately resolves on the remuneration of the board members in line with the remuneration policy.

For non-public companies, remuneration policy does not need to be announced or disclosed, as the authorising general assembly resolution would not be subject to registration with the trade registry.

The remuneration policies of listed companies must be announced on both the company website and the public disclosure platform.

Note that companies that are not listed but are active in specifically regulated sectors have disclosure obligations toward their overseeing authorities/institutions. For example, payment institutions must share such information with the Turkish Central Bank at specific intervals.

As per the so-called sole-obligation principle that applies to JSCs, save for very limited exceptions stipulated in law, no obligation can be imposed on the shareholders other than the obligation to pay the share subscription price and (if any) the premium. The primary obligation of a shareholder is to pay the outstanding portion of its capital subscription in due time.

JSC shareholders are not bound by a non-compete obligation toward the company. As for LLCs, shareholders have an obligation to refrain from actions that are to the detriment of the company, and specifically cannot carry out actions for their own benefit which do damage to the company. If foreseen under the articles of association of the LLC, shareholders may be prohibited from actions that compete with the company.

The TCC and the articles of association of the company govern the relationship between the shareholders and the company.

The non-delegable duties (reserved matters) of the general assembly, mentioned in 3.2 Decisions Made by Particular Bodies, constitute the general assembly’s main role in the company. In this light, the general assembly is obliged to take on the management of its reserved roles, while refraining from interfering in matters that fall under the board’s non-delegable duties.

Unlike in a JSC, where representatives of the company are appointed by the board, in an LLC the general assembly may also appoint representatives of the company.

An ordinary general assembly is required to convene within three months as of the end of each financial year. General assembly meetings are called by the board.

Unless a higher quorum is stipulated under the articles of association of the company, pursuant to the default TCC provisions, simple majority shareholding will be sufficient to control a JSC for most purposes.

The TCC contains a very limited number of super majority requirements for general assemblies and decisions. It is possible for the shareholders to add to the list of super majority decisions or provide for higher (but not lower) quorum and voting requirements than those set forth in the TCC.

Please refer to 3.3 Decision-Making Processes for further details on the invitation to these meetings, and the decision-taking quorum.

During the meeting, the meeting minutes are held and signed by the shareholders. A list of attendees is signed by those present at the meeting. For JSCs, this includes a board member. If the company has a single shareholder, the list of attendees does not have to be prepared.

The shareholders may bring a claim against the directors if the directors breach their obligations under the law or the articles of association with fault, and if in doing so they cause damage to the shareholders.

Shareholders are entitled to bring a claim against the company for the cancellation of general assembly resolutions and board resolutions based on grounds specifically listed under the TCC.

Shareholders (including groups of shareholders acting in concert with each other) must disclose when they reach or fall below certain thresholds (5%, 10%, 15%, 20%, 25%, 33%, 50%, 67%, or 95%) of the share capital or total voting rights, whether directly or indirectly. For direct shareholding changes, the Central Securities Depository (MKK) makes the relevant disclosure. For shareholding changes that are indirect or a result of acting in concert or changes in voting rights triggering the thresholds, the relevant investors are required to make the disclosures themselves.

Shareholders (including groups of shareholders acting in concert with each other) owning more than 20% of company’s shares or shareholders who are in possession of privileged shares to appoint or nominate at least one board member are required submit a share sale information form to the CMB for approval before selling shares corresponding to more than 10% of the company’s capital in a 12-month period. The same obligation applies to converting more than 10% of the company’s non-tradeable shares into tradable shares.

Shareholders owning 10% or more of the shares in a company, directly or indirectly, or shareholders who are in possession of more than 10% of the privileged shares to appoint or nominate at least one board member also have the obligation to make a special events disclosure if they obtain any non-public insider information not known by the company.

While the capital markets legislation does not use the term “ultimate beneficial owner”, listed companies are required to disclose their shareholding structure every six months. The declared shareholding structure must be cleared of any indirect shareholdings and cross-shareholdings and must clearly indicate the names of natural person shareholders owning more than 5% of shares.

An ordinary general assembly is required to convene within three months as of the end of each financial year. During this meeting, among other items, the approval of the annual report, financial statements and the dividend distribution are discussed. Ordinary general assembly meetings are not subject to registration, and such annual reports and financial statements are not announced. However, the announcement and reporting requirements of listed companies and companies active in specifically governed sectors are highly regulated.

For companies that are not listed, in principle, such disclosures are not required. As an exception, control agreements (establishing control by one company over another) must be registered with the trade registry and announced on the Trade Registry Gazette in order to be valid.

On the other hand, listed companies are subject to strict disclosure and transparency measures. Such disclosures are made on the company’s website and the public disclosure platform.

Certain actions within a company require registration with the trade registry, before which the company is registered. These actions include, among others, amending the company’s articles of association (including changing the share capital of the company), adopting an internal directive regarding the representation of the company, and changing the company’s registered address. Such actions are effective upon registration with the trade registry, as stipulated under the TCC. Therefore, in order to effect the actions that require such registration, filings must be made.

The registrations made with the trade registry are announced in the Trade Registry Gazette, which is publicly available. Such announcements only include the content that is subject to the registration, while additional documents are often submitted during the registration application. These additional documents, such as a power of attorney used during the transaction, remain in the company’s registry files, and may be reviewed by those who request to review the relevant file at the trade registry.

As per Decree 634 on Determination of Companies Subject to Independent Audit (the “Decree”), companies that – alone or together with their affiliated companies and subsidiaries – meet at least two of the following conditions in two consecutive fiscal periods, are subject to independent auditing:

• total assets equal to or higher than TRY35 million;
• annual net sales revenue equal to or higher than TRY70 million; and
• total number of employees equal to or higher than 175.

Companies listed explicitly in Appendix I of the Decree (such as banks, financial leasing companies or investment companies) are subject to independent auditing regardless of the above-mentioned thresholds. Also, companies listed in Appendix II of the Decree (such as the companies operating in the energy sector with a licence or media service provider companies that own national, satellite and cable channels) are subject to independent auditing if such companies satisfy certain conditions specifically provided for them.

The independent auditor is tasked with auditing the financial statements and periodic auditing of the inventory and accounting, risk commission’s report and annual reports of the board. The auditors then provide a report, which could have one of the following conclusive opinions: affirmative, qualified affirmative, negative, or abstention.

In the case of a negative opinion or an abstention report, the board will be required to call a general assembly meeting within four business days as of the receipt of the opinion of the independent auditor and resign effectively as of the date of the general assembly meeting. The financial statements and the annual report have to be drafted again within six months by the new board to be appointed by the general assembly.

One of the non-delegable duties of the board, and hence the directors, is setting up necessary arrangements for the accounting, financial auditing and financial planning (if required for the management of the company). This duty is an extension of the directors’ duty to establish an internal control mechanism. Additionally, it is among the non-delegable duties of directors to establish an early detection and management of risks committee.

Listed companies are obliged to establish an expert committee, and operate and develop a system, in order to ensure early detection of threats to the existence, development and continuity of the company; to implement the necessary measures and remedies; and to manage the risk. In other companies, this committee is established immediately if the auditor deems it necessary and notifies the board in writing.