Evaluation of the Concept of Whistleblowing in Turkish Company Law from A Comparative Corporate Law Perspective

Abstract

Individuals who report illegal activities, abuses, corruption, or unethical practices within an organization to the relevant authorized unit within the organization, applicable administrative body, or the general public are considered whistleblowers. In several cases, whistleblowers prevent illegal activity in corporations by informing the public and appropriate administrative entities; however, the significance of whistleblowers in company law has not been recognized. In particular, the whistleblowers' actions in corporations are severely limited due to the absence of a legal protection system for whistleblowers. Today, to prevent this problem, many countries have implemented legal regulations on whistleblower activities within the company. In the wake of the Enron and WorldCom scandals in the United States, for instance, the significance of whistleblower protection was recognized. Moreover, the Sarbanes-Oxley Act and the Dodd-Frank Act, which were enacted subsequent to the 2007-2008 financial crisis, respectively, incorporated provisions for safeguarding the whistleblowers. Similarly, the Public Interest Disclosure Act was adopted in the United Kingdom in 1998. In addition, the European Union adopted the European Union Notification Directive No. 2019/1937 in 2019 to regulate and protect whistleblowers in the commercial and public sectors. However, no law in Turkey guides the recognition of unlawful violations and the protection of whistleblowers by implementing a whistleblowing system in companies. Therefore, first, this article will establish the theoretical basis underpinning whistleblowing in the context of corporate governance and compliance. Second, the role and significance of whistleblowing in comparative law and the lessons that can be applied in Turkish law will be addressed. Finally, evaluations of the Turkish corporate law provisions about whistleblowing will conclude the paper, suggesting that incorporating whistleblowing mechanisms into Turkish corporate governance frameworks could potentially aid in minimizing corporate abuses and wrongdoing.