Accepting a resignation is one of the most frequently encountered issues, particularly in corporate practice. There are numerous boards of directors’ resolutions taken by corporations in Turkey, where the board of directors accepts the resignation of one of the board members and temporarily elects a new name for the vacant membership. Or there are instances where a manager rejects the resignation of a well-regarded employee. All right, but are these practices legally appropriate?

First, let us look at what resignation is.

What is Resignation?

The Turkish word istifa, used for resignation, is an etymologically Arabic word that means asking for forgiveness. From a legal point of view, in private law relations (relationships in which one of the parties does not use state power), resignation is the right to terminate a contract with a unilateral declaration of intent.

The basis of this right is either the law and/or a debt relationship between the parties. Such debt relationship may be, for instance, a general service contract between home workers and residents (Turkish Code of Obligations Article 393 et seq.), an employment contract between employees and a corporation (Labor Law Article 8 et seq.), or an agency contract between board members and a corporation (Turkish Code of Obligations Article 502 et seq.). The following rights arise from such a debt relationship:

• Principal rights are the rights to receivables. E.g., the wage paid by an employer or the work performed by an employee.
• Ancillary rights are the rights that expand the rights to receivables mentioned above. E.g., interest, penalty clause, or compensation for a delay.
• Secondary rights are the rights that affect and regulate the principal rights:
  • Status-changing rights ensure forming, modifying, or abolishing a relationship with the right holder’s unilateral declaration of intent. E.g., the right to terminate a contract.
  • Plea rights are the means of defense that a debtor must bring forward when a creditor claims the debt. E.g., declaring that the debt is time-barred.

And resignation is among the abolishing status-changing rights.

Can It be Accepted? Rejected? Revoked?

The main features of the status-changing rights give the answers to these questions, which are:

In practice, many institutions ignore these principles. However, this may have significant consequences in terms of the rights and obligations of the parties. If there is no conflict between the parties, these issues will not come into question. Though, they can become quite annoying in case of a dispute.

Two Instances of Disputes

Commercial Court of First Instance

A limited liability company partner and manager transferred his shares in 2007. During the transfer, he, the company, other partners, or the other manager did not take any action regarding his management duty. Then he realized that he was still one of the managers of this company when the tax authority served tax penalty notices to him. So, in 2013, he began his attempts to convey his resignation statement to the company officials and the company in various ways. However, the last time in 2014, including the official service attempt, failed. Finally, the same year, he filed a lawsuit at the Commercial Court of First Instance to ensure that the company’s general assembly accepted the resignation, the other manager registered it to the trade registry, and the trade registry announced it in the trade registry journal.

The lawsuit came before the Supreme Court. In its 2017 judgment, the Supreme Court emphasized that “a resignation does not depend on the acceptance of the addressee.” However, it ruled that the manager’s resignation statement must be served to the company “to end his managerial duty,” and towards third parties, “the resignation will be effective upon registration to and announcement by the trade registry.”

However, as the reasoning for the dissenting vote accurately states, notifying the resignation to the company, taking a general assembly resolution, and registering and announcing it “does not affect the validity of the resignation, which one can exercise through a unilateral declaration of intent.” The notification and general assembly resolution are for determining the liabilities of the resigned manager towards the company, and the registration and announcement are for determining his liabilities towards third parties who enter transactions with the company.

Labor Court

A union’s board of directors’ chairman resigned from the board in 2018 and, thinking that the board of directors did not accept his resignation, continued his duty for eight more months after his resignation. Later, he learned that the board of directors accepted his resignation by a resolution, and he filed a lawsuit at the Labor Court for establishing that this resolution was invalid.

The lawsuit came before the Regional Court of Appeals and then to the Supreme Court. In its 2019 judgment, the Supreme Court first reminded the parties that “there is no form required for a resignation statement, and a resignation is an abolishing status-changing unilateral transaction.”

However, in its judgment, the Supreme Court also added that “as the resignation statement will be effective upon reaching the addressee, the resigned person can withdraw from the resignation before this statement reaches the addressee.” Thus, the Supreme Court ruled that “whether the resignation intent or the withdrawal intent reached the union board of directors initially, should be determined without any hesitation, and the court should render the judgment accordingly.”

In a Nutshell

In entering legal transactions, using the concepts and terms properly, observing the basic principles and institutions of law, and ensuring that the actions and transactions are consistent, are all critical. Ignoring these points leads to disputes, leading to reputational, monetary, opportunity, and time costs!

Av. Müge Önal Başer, LL.M., LL.B.

References

1. Labor Law No. 4857, published in the Official Journal dated 10 June 2003 and numbered 25134.
2. Turkish Code of Obligations No. 6098, published in the Official Journal dated 04 February 2011 and numbered 27836.
3. Turkish Commercial Code No. 6102, published in the Official Journal dated 14 February 2011 and numbered 27846.
4. Relevant Supreme Court Judgments: 11th Civil Law Chamber, 13 March 2017, E. 2015/13645 K. 2017/1451; 22nd Civil Law Chamber, 01 October 2019, E. 2019/6672 K. 2019/17765, https://www.lexpera.com.tr/ (last visited 28 March 2022).
5. Pulaşlı, Hasan: Şirketler Hukuku Genel Esaslar, Ankara 2017.
6. Eren, Fikret: Borçlar Hukuku Genel Hükümler, Ankara 2018.
7. Eren, Fikret: Borçlar Hukuku Özel Hükümler, Ankara 2018.
8. Süzek, Sarper: İş Hukuku, İstanbul 2018.
9. Kılıçoğlu, Ahmet M.: Borçlar Hukuku Genel Hükümler, Ankara 2019.
10. Taşdelen, Nihat: “Anonim Ortaklıkta Yönetim Kurulu Üyelerinin Ortaklığın Vergi Borçlarından Dolayı Sorumluluğu ve Yurt Dışına Çıkış Yasağı,” Dicle Üniversitesi Hukuk Fakültesi Dergisi 2006, V. 10-11, I. 12, p. 39-85.
11. Yavuzdoğan, Seçkin: “İdare Hukukunda ‘İstifa’ (Resignation in Administrative Law),” International Journal of Legal Progress 2016, V. 2, I. 2, p. 116-126.
12. Bedük, Mehmet N.: “İş Sözleşmesinin İşçi Tarafından Feshi ve Feshin Hukuki Sonuçları,” Selçuk Üniversitesi Hukuk Fakültesi Dergisi 2019, V. 27, I. 3, p. 679-726.
13. https://www.etimolojiturkce.com/kelime/istifa (last visited 28 March 2022).