The Electronic Board of Directors meetings system enables board members of Turkish companies to, regardless of their citizenship status, hold meetings and issue resolutions in different language options without the need to be present in the same room or even in the same country. As we see more and more Turkish startup companies attracting foreign investors, the electronic BoD system enables foreign BoD members appointed by the foreign investors in Turkish companies to better supervise the company activities.
1) Is it necessary to have a provision in the Articles of Association (“AoA”) of the company to benefit from this?
Necessarily yes. However, as a Covid-19 measure during the pandemic, it is made possible to convene the electronic Board of Directors in the absence of such provision in the Articles provided that at the first General Assembly meeting held following the first electronic Board of Directors, general assembly should amend the Articles as required by law. The important point is that this amendment should be made at the first GA meeting held after the first electronic BoD meeting. This means the absence of the provision for electronic Board of Director meetings in the AoA is not an obstacle to transition to the electronic Board of Directors system.
2) How do you make a transition from traditional BoD meetings to electronic ones?
This is possible for Board members by obtaining electronic signatures (https://www.btk.gov.tr/elektronik-sertifika-hizmet-saglayicilari) or mobile signatures from authorized service providers listed on Information and Communication Technologies Authority's (Bilgi ve İletişim Teknolojileri Kurumu – “BTK” ) website. Even though it is not mandatory to outsource electronic BoD infrastructure services as every company is allowed to set up its infrastructure provided that it complies with the required standards to protect sensitive trade information, most companies do not bother with setting up their system. At the time, the only company providing an outsourcing service for setting up the required electronic infrastructure for electronic BoD meetings is the Central Securities Depository (Merkezi Kayıt Kuruluşu – “MKK”). MKK is the service provider and sells electronic Board of Directors System (e-BDS) products to customer companies.
3) How to set up the infrastructure?
MKK's information system specialists handle the setting up of the entire infrastructure in the company premises except for the VPN server, which is the responsibility of the customer company. VPN ensures a secure circulation of company documents that may contain trade secrets. Once the system’s setup is complete, the customer company appoints a company secretary in the system. This company secretary may be a member of the Board of Directors or another person authorized by the Company. The role of the company secretary is to take on tasks such as setting up meetings as the system administrator, and identifying and verifying the BoD members who will sign the resolutions with their e-signature.
4) How will the BoD members sign the decisions through this system?
The member of the Board of Directors will be able to log into the e-BDS system by plugging their e-signature token into the USB port of their device anywhere around the world. They will be able to review the resolutions in different languages, participate in live meetings, and vote.
5) Is it mandatory for all BoD members to obtain e-signatures to transition to the system?
It's not necessarily required for each member to obtain an e-signature for transition to an electronic BoD system. E-signed documents can be wet-ink signed by members of the Board of Directors who do not op to using e-signatures. The upside of using the e-signatures on resolutions is that e-signed documents are not necessarily required to be notarized. If all BoD members use e-signatures, documents can be submitted before public agencies without the need for notarization. However, if there are wet-ink signatures on the partly e-signed documents, those wet-ink signatures still must be notarized.
6) How will foreign BoD members who are residents abroad obtain the e-signature?
E-signature service providers handle the required procedures for foreign resident BoD members to obtain their e-signature tokens. The member of the Board of Directors abroad fills out the form that he/she must fill out and sends the passport number and potential tax number to the e-signature provider firm.
7) What is the difference between the BoD circulars system available at the Central Registration System (Merkezi Sicil Kayıt Sistemi - “MERSİS”) as allowed by Article 390/4 of the Turkish Code of Commerce and the e-BDS system?
Article 390/4 of the Turkish Code of Commerce No. 6102 allows the company’s BoDs to issue resolutions in the absence of a physical meeting, circulating a text written in the form of a BoD resolution between the members. MERSİS enables such mechanism stipulated in the Art.390/4 of the TCC to operate digitally. Even though there are certain similarities with the MKK’s e-BDS product, MERSİS’ system requires all BoD members to have an e-signature to use the system as a downside.