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TURKEY’ CORPORATE GOVERNANCE CODE

Board of Directors

I. Introduction

Board of directors keeps in balance a corporation’s risk, growth and return at the most appropriate level through strategic decisions and manages and represents the corporation by firstly protecting the long-term benefits of the corporation through rational and prudent risk management. Board of directors shall conduct its activities in transparent, accountable, fair and responsible way.

II. Structure of Board of Directors

  • The number of members of the board of directors shall be at least five in any case.
  • A majority of the board of directors shall consist of members who do not have an executive duty. A non-executive member of the board of directors shall be the person who does not have any administrative duty other than being a board member and is not involved in the daily work routine or ordinary activities of the corporation.
  • There shall be independent members from among the non-executive board members who have the ability to fulfill their duties impartially.
  • The number of independent board members cannot be less than one third of the total number of board of directors. In any case, the number of independent board member shall not be less than two.
  • The term of office of the independent members of the board of directors shall be up to three years and it shall be possible to nominated as a candidate and elected again.

III. Types of Committees

  1. Audit Committee
    1. Composition:

      The Audit Committee shall comprise of at least two members, who shall be independent members of the board.

    2. Role:
      • The Audit Committee shall convene at least four times a year, provided that it is once in three months.
      • The minutes of the committee should be recorded and they should submit the resolutions to the board of directors.
      • The Audit committee shall be in charge of the supervision of the corporation’s accounting system, public disclosure of the financial information, independent auditing and the operation and efficiency of internal control and internal audit system. Election of the independent audit institution, initiation of the independent audit process by preparing the contracts of independent audit and the work of the independent audit institution at all levels shall be conducted under the supervision of the audit committee.
      • The independent audit institution and the service to be purchased from this institution shall be determined by the audit committee and submitted for the approval of the board of directors.
  2. Corporate Governance Committee
    1. Composition:

      The Corporate Governance Committee shall comprise of at least two members. In case there are two members, both of them, and in case there are more than two members, the majority of them shall be comprised of non-executive members of the board of directors.

    2. Role:

      The Corporate governance committee shall determine as to whether principles of corporate governance apply, if not applied its grounds and state the conflict of interest which arises for not complying with these principles and give advice to the board of directors in order to enhance the implementation of corporate governance and supervise the work of the investor relations department.

  3. Nomination Committee
    1. Composition:

      The Nomination Committee shall comprise of at least two members. In case there are two members, both of them, and in case there are more than two members, the majority of them shall be comprised of non-executive members of the board of directors.

    2. Role:
      • Be in charge of forming a transparent system on determination, evaluation and training of the candidates suitable for the positions of the board of directors and executives and to determine policies and strategies with this regard.
      • Evaluate regularly the structure and productivity of the board of directors and submit its advices to the board of directors regarding possible amendments in this respect.
  4. Early Detection of Risk Committee
    1. Composition:

      The Early Detection of Risk Committee shall comprise of at least two members. In case there are two members, both of them, and in case there are more than two members, the majority of them shall be comprised of non-executive members of the board of directors.

    2. Role:

      The committee of early detection of risk shall be responsible for early detection of the risks which   poses a threat to the existence, development and continuation of the corporation, taking the necessary measures with respect to detected risks and working on risk management. The committee of early detection of risk shall review the risk management systems at least once a year.

  5. Remuneration Committee
    1. Composition:

      The Remuneration Committee shall comprise of at least two members. In case there are two members, both of them, and in case there are more than two members, the majority of them shall be comprised of non-executive members of the board of directors.

    2. Role:
      • Be in charge of designations of the principles, criteria and implementations to be used in the remuneration of the members of the board of directors and the executives, considering the long term targets of the corporation and supervision thereof.
      • Submit its advices with respect to the remuneration of the board of directors and the executive managers, considering the achievement level to the criteria used in remuneration.

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