Power of Attorney in Joint Stock and Limited Liability Companies

Joint stock and limited liability companies act through representatives in order to fulfil their commercial activities and to carry out transactions with third parties. However, the powers of representation granted to representatives are not always unlimited. The power of representation is subject to the limitations set forth in the Turkish Commercial Code No. 6102 (TCC). Therefore, it is important to understand how the power of representation is defined and its limits in joint stock and limited liability companies.

Representation in Joint Stock Companies

Pursuant to Article 365 of the TCC, joint stock companies shall, as a rule, be managed and represented by the board of directors. Pursuant to Article 370 of the TCC, the power of representation in joint stock companies shall be exercised by the board of directors with double signature, unless otherwise stipulated in the articles of association of the company or unless the board of directors is composed of a single person. However, the board of directors may delegate its representation authority to one or more representative members or third parties as managers. However, despite such delegation, at least one member of the board of directors must have the power of representation. The powers other than the non-transferable and inalienable powers listed in the TCC and the powers prohibited to be transferred in the articles of association of the company may be transferred by the board of directors.

Representation in Limited Liability Companies

Pursuant to Article 623 of the TCC, representation and management powers in limited liability companies are regulated by the company agreement. The representation authority of the company may be delegated to one or more shareholders which is/are holding the manager title or to all shareholders or to third parties by the company agreement. At least one of the shareholders of the company must be authorized to represent the company. The directors shall exercise their representation authority within the limits set forth in Article 625 of the TCC. Pursuant to this provision, the authority to represent the company may be delegated in cases determined in the company agreement and not restricted by law. In addition, pursuant to Article 629 of the TCC, the provisions of joint stock companies shall apply by analogy in the scope of representation powers and the determination of signatory authorities.

Authorization by Power of Attorney in Joint Stock and Limited Liability Companies

In practice, it is not possible for the authorized bodies of the company and the persons authorized to represent the company in the internal directive to carry out all the business and transactions required by the company personally. Joint stock and limited liability companies may prefer to issue a power of attorney in order to carry out their commercial activities faster and to appoint a representative for transactions that may require expertise. Authorization by power of attorney can be in the following methods:

• The board of directors in joint stock companies and unlimited authorized managers in limited liability companies may authorize third parties to represent them by power of attorney.
• Pursuant to the internal directive of the company, a representative may be appointed by power of attorney by the authorized signatories who are authorized to issue power of attorney on behalf of the company and authorized in this regard in the internal directive.
• Pursuant to the internal directive of the company, third parties may be authorized by power of attorney by the persons authorized to represent and bind the company in the broadest manner in all matters.

As a result, the powers of representation in joint stock and limited liability companies are subject to the TCC and are limited. For this reason, powers of attorney are frequently preferred for faster execution of commercial activities and for the execution of works that may require expertise. With these powers of attorney, companies may authorize certain persons to represent the company in certain matters. However, these authorization transactions are also subject to certain limitations and must be carried out in accordance with legal regulations.