Learn about the fiduciary duties of company directors under Turkish Commercial Law. Discover the duties of care and loyalty, conflicts of interest, director liability, business judgment rule, shareholder rights, and legal remedies in this 2026 Updated Legal Guide.

Directors play a central role in the governance and management of Turkish companies. Whether the company is a family-owned enterprise, multinational subsidiary, start-up, joint venture, or publicly held corporation, directors are entrusted with managing corporate affairs in the best interests of the company.

Foreign investors often appoint directors after acquiring a Turkish company or establishing a local subsidiary. While directors have broad authority to represent and manage the company, they also assume significant legal responsibilities. Failure to comply with these obligations may expose directors to civil liability and, in some circumstances, administrative or criminal consequences.

Under the Turkish Commercial Code (TCC), members of the board of directors must perform their duties with the care of a prudent manager and protect the interests of the company in accordance with the principle of good faith. These obligations are commonly described as directors’ fiduciary duties and form one of the cornerstones of Turkish corporate governance.

This 2026 Updated Legal Guide explains the fiduciary duties of directors under Turkish law, the legal consequences of breaching those duties, and how companies and foreign investors can reduce governance risks.

---

What Are Fiduciary Duties?

Fiduciary duties are legal obligations requiring directors to act honestly, diligently, loyally, and in the best interests of the company.

These duties are intended to:

• Protect the company.
• Protect shareholders.
• Promote sound corporate governance.
• Prevent misuse of corporate authority.
• Reduce conflicts of interest.
• Encourage responsible decision-making.

Fiduciary duties apply regardless of whether the director is a Turkish or foreign national.

---

Who Owes Fiduciary Duties?

These duties generally apply to:

• Members of the Board of Directors of a Joint Stock Company (A.Ş.).
• Company managers of a Limited Liability Company (Ltd. Şti.), where applicable under Turkish company law.
• Executive directors.
• Delegated managers exercising board authority.
• Individuals performing management functions under delegated powers.

The scope of responsibility depends on each individual’s legal role and delegated authority.

---

The Duty of Care

The duty of care requires directors to:

• Act diligently.
• Make informed decisions.
• Exercise appropriate business judgment.
• Supervise company affairs.
• Monitor financial performance.
• Establish effective internal controls.
• Protect company assets.
• Comply with applicable laws.

The Turkish Commercial Code requires directors to exercise the care expected of a prudent manager when performing their duties.

---

The Duty of Loyalty

The duty of loyalty requires directors to place the company’s interests above their personal interests.

This generally includes:

• Avoiding conflicts of interest.
• Protecting confidential information.
• Acting honestly.
• Refraining from self-dealing.
• Avoiding misuse of corporate opportunities.
• Preserving company assets.
• Acting fairly toward the company.

The duty of loyalty continues to apply even where directors have been appointed by particular shareholders.

---

Duty to Act in Good Faith

Directors should:

• Exercise powers honestly.
• Avoid abuse of authority.
• Comply with mandatory legal rules.
• Make decisions for legitimate corporate purposes.
• Avoid actions intended solely to benefit particular individuals at the company’s expense.

The principle of good faith is a fundamental concept of Turkish private law and corporate governance.

---

Duty to Protect Corporate Interests

Directors should manage the company with the objective of promoting its lawful commercial interests.

This includes:

• Long-term sustainability.
• Financial stability.
• Legal compliance.
• Risk management.
• Corporate reputation.
• Operational continuity.

Personal interests should not override corporate interests.

---

Duty to Avoid Conflicts of Interest

Conflicts of interest arise where personal interests interfere with corporate responsibilities.

Examples include:

• Transactions with related parties.
• Personal financial interests.
• Family relationships.
• Competing businesses.
• Corporate opportunities.
• Self-dealing arrangements.

Directors should disclose potential conflicts and follow the applicable approval procedures under Turkish law and the company’s governance documents.

---

Confidentiality Obligations

Directors have a continuing obligation to protect confidential company information.

Confidential information may include:

• Financial records.
• Trade secrets.
• Customer lists.
• Pricing strategies.
• Business plans.
• Intellectual property.
• Acquisition negotiations.
• Technology.

Unauthorized disclosure may expose directors to legal liability.

---

Duty of Supervision

The Board of Directors has a supervisory role over corporate management.

This generally includes oversight of:

• Financial reporting.
• Compliance systems.
• Internal controls.
• Risk management.
• Senior executives.
• Regulatory obligations.
• Accounting practices.

Delegating operational tasks does not automatically eliminate the board’s supervisory responsibilities.

---

Compliance Responsibilities

Directors should establish systems supporting compliance with:

• Turkish Commercial Code.
• Tax legislation.
• Employment law.
• Competition law.
• Personal Data Protection Law.
• Anti-money laundering requirements.
• Industry-specific regulations.

Effective compliance programs reduce corporate and personal legal risk.

---

The Business Judgment Rule

Turkish courts generally distinguish between poor commercial outcomes and negligent decision-making.

A director is not automatically liable simply because a business decision results in financial loss.

Where directors:

• Gather appropriate information.
• Act in good faith.
• Avoid conflicts of interest.
• Exercise reasonable care.
• Make informed decisions.

courts are often reluctant to substitute judicial hindsight for legitimate business judgment. However, this principle does not protect decisions tainted by bad faith, gross negligence, conflicts of interest, or violations of mandatory law.

---

Liability for Breach of Fiduciary Duties

Directors who breach their statutory duties may face liability for losses caused to:

• The company.
• Shareholders.
• Creditors, where permitted by law.

Potential claims may involve:

• Financial losses.
• Improper transactions.
• Negligent management.
• Failure to supervise.
• Misuse of corporate assets.
• Breach of statutory obligations.

Liability depends on the specific facts and the requirements of the Turkish Commercial Code.

---

Related-Party Transactions

Transactions involving:

• Directors.
• Controlling shareholders.
• Family members.
• Group companies.
• Affiliated businesses.

require particular attention.

Such transactions should be transparent, properly authorized where required, and conducted on arm’s-length terms to reduce the risk of future disputes.

---

Delegation of Authority

The Board may delegate certain management functions where permitted by law and the company’s constitutional documents.

However, delegation does not necessarily eliminate responsibility for:

• Proper supervision.
• Selection of delegates.
• Establishment of control systems.
• Monitoring delegated activities.

Directors should ensure that delegated authority is clearly documented.

---

Liability Insurance

Many companies obtain Directors and Officers (D&O) Liability Insurance.

Although insurance may provide financial protection against certain claims, it generally does not eliminate directors’ legal duties or cover every type of misconduct.

Insurance should be reviewed together with indemnification arrangements and corporate governance policies.

---

Best Practices for Directors

Directors should:

• Attend board meetings regularly.
• Review board materials carefully.
• Record dissent where appropriate.
• Maintain accurate minutes.
• Monitor compliance.
• Avoid conflicts of interest.
• Protect confidential information.
• Obtain independent legal advice when necessary.
• Review major transactions carefully.
• Ensure effective internal controls.

Strong governance significantly reduces liability risks.

---

Common Mistakes

Directors frequently:

• Ignore compliance obligations.
• Approve transactions without adequate information.
• Fail to supervise management.
• Overlook conflicts of interest.
• Ignore board procedures.
• Fail to document decisions.
• Neglect risk management.
• Assume delegation removes liability.

These mistakes often become the basis of shareholder or corporate claims.

---

Why Professional Legal Assistance Is Essential

Directors’ duties involve multiple areas of law, including:

• Corporate law.
• Commercial law.
• Employment law.
• Tax law.
• Competition law.
• Data protection.
• Regulatory compliance.
• Corporate governance.
• Commercial litigation.

An experienced Turkish corporate lawyer can:

• Advise directors on their statutory duties.
• Review governance structures.
• Develop compliance programs.
• Assess conflicts of interest.
• Draft board resolutions.
• Conduct internal investigations.
• Defend director liability claims.
• Reduce corporate governance risks.

Early legal guidance is particularly valuable for foreign-appointed directors who may be unfamiliar with Turkish corporate governance requirements.

---

Frequently Asked Questions

1. What are fiduciary duties under Turkish law?

They are the legal obligations requiring directors to act with due care, loyalty, honesty, and in the best interests of the company while complying with the Turkish Commercial Code.

2. Do foreign directors have the same duties as Turkish directors?

Yes. Directors’ statutory duties apply regardless of nationality.

3. What is the duty of care?

The duty of care requires directors to act as prudent managers by making informed decisions, supervising company affairs, and exercising appropriate diligence.

4. What is the duty of loyalty?

The duty of loyalty requires directors to prioritize the company’s interests, avoid conflicts of interest, and refrain from using their position for personal benefit.

5. Can directors be personally liable for poor business decisions?

Not necessarily. Turkish courts generally distinguish between reasonable business judgments made in good faith and decisions involving negligence, bad faith, conflicts of interest, or violations of law.

6. Does delegating authority remove directors’ responsibility?

No. Although operational functions may be delegated, directors generally retain oversight responsibilities and should monitor delegated activities appropriately.

7. Can directors be liable to shareholders?

Yes. Under the conditions established by Turkish law, directors may face liability for losses resulting from breaches of their statutory duties.

8. Why should foreign companies obtain legal advice regarding directors’ duties?

A Turkish corporate lawyer can help directors understand their statutory obligations, implement effective governance systems, manage conflicts of interest, strengthen compliance programs, and reduce the risk of personal liability.

Legal Support – Contact Our Corporate and Commercial Lawyers

Strong corporate governance begins with directors who understand and comply with their legal obligations. Whether you are appointing directors to a newly established Turkish subsidiary or managing a multinational corporate group, proactive legal advice can significantly reduce governance risks and protect both the company and its management.

Fırat Fesih Kaya and our legal team advise foreign investors, multinational corporations, board members, private equity funds, family businesses, entrepreneurs, and international companies on directors’ duties, corporate governance, compliance programs, shareholder disputes, mergers and acquisitions, commercial litigation, and all aspects of Turkish corporate law.

Phone: +90 312 434 22 22

Mobile: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey