Informal association (Netherlands): liability and rules

An association with limited legal capacity (vereniging met beperkte rechtsbevoegdheid), often called an informal association, is a full legal person. You can set one up without a notarial deed, and it can hold assets, sign contracts and sue and be sued in its own name. The important exception: it cannot acquire registered property and cannot be an heir, and its directors can be personally liable for its debts.

What can an informal association do, and what not?

It can do almost everything a formal association can do. According to article 2:30(1) of the Dutch Civil Code (BW), an association whose articles are not laid down in a notarial deed cannot acquire registered property (registergoederen), such as real estate, and cannot be an heir.

Those two limitations are the whole of the difference in capacity. For most sports clubs, neighbourhood associations and hobby groups they make no practical difference. The association can still open a bank account, rent premises, employ staff and enter into agreements.

When are the directors personally liable?

Directors are jointly and severally liable alongside the association for debts arising from legal acts that become due during their term of office. That follows from article 2:30(2) BW, and it is the difference that matters most in practice.

The liability continues after a director steps down. A former director remains liable for debts arising from a legal act performed during his term of office, to the extent that no sitting director is liable for them alongside the association.

There is one way out. A director who was not consulted about the legal act in advance, and who refused to take responsibility for it as a director once he learned of it, is not liable under article 2:30(2) BW. Simply showing that you personally did nothing wrong is not enough.

What does registration in the commercial register change?

Registration makes the directors’ liability subsidiary. Once the association is registered with the Chamber of Commerce (KVK), a director is liable only to the extent that the creditor makes it plausible that the association itself will not pay (article 2:30(4) BW).

Under article 2:30(3) BW the directors may register the association; Book 2 does not require it. According to the KVK, registration is not mandatory but advisable because it reduces the personal liability of directors. If the association runs a business (onderneming), registration is required. For the board, registration is the cheapest piece of risk management available.

How do you set up an informal association?

You set it up by agreement between the founders. No notarial deed and no minimum capital are required. You can record the articles in a private document, and we strongly advise doing so.

The articles should at least state:

the name, the seat and the purpose of the association;
how members are admitted and removed;
how the board is appointed and dismissed;
how the general meeting makes decisions;
what happens to any surplus on dissolution.

An association may make a profit, but under article 2:26(3) BW it may not distribute profits among its members.

Which governance rules apply anyway?

The Management and Supervision of Legal Entities Act (Wet bestuur en toezicht rechtspersonen, WBTR), in force since 1 July 2021, also applies to associations, including informal ones. It brings statutory rules on conflicts of interest, on the absence or inability to act of directors, and on directors’ liability in insolvency.

Three points are worth knowing:

A director with a direct or indirect personal interest that conflicts with the interest of the association does not take part in the deliberation and decision-making (article 2:44(6) BW).
The articles must contain rules on how the association is managed for the time being if all directors are absent or unable to act (article 2:44(5) BW).
In bankruptcy, directors can be held liable for the shortfall in the event of manifestly improper management. For informal associations, the statutory presumptions of improper management (for instance after a failure to keep proper books) do not apply, so the trustee has to prove it.

Articles drawn up before the WBTR often lack the provision on absence and inability to act. Reviewing them is a short job and has a real effect on the directors’ exposure.

How does it compare with an association with full legal capacity?

An association with full legal capacity is formed by notarial deed and has no restrictions on registered property or inheritance. The main differences:

it can acquire registered property and be an heir;
its directors are not personally liable in the way described above;
registration in the commercial register is compulsory;
it must register its ultimate beneficial owners in the UBO register. According to the KVK, an informal association without a business does not have to do so.

You convert from limited to full legal capacity by having a notary lay down the articles in a notarial deed. The legal person remains the same, so contracts, assets and memberships continue unaffected.

Association, foundation or owners’ association: which fits?

The choice depends on who should have the final say. An association has members, and its general meeting ultimately decides. A foundation (stichting) has no members and is governed by its board, which makes it unsuitable where the participants want a say.

An owners’ association (vereniging van eigenaars, VvE) is a separate case. It arises by operation of law when a building is divided into apartment rights and follows its own rules in Book 5 BW.

In summary

An informal association is a legal person, but it cannot acquire registered property or be an heir (article 2:30(1) BW).
Directors are jointly and severally liable for debts that become due during their term, and in some cases after they step down.
Registration in the commercial register makes that liability subsidiary.
The WBTR applies to informal associations too; check that your articles contain rules on absence and inability to act.
Converting to full legal capacity takes a notarial deed; the legal person stays the same.

Frequently asked questions

Can an informal association own a building?

No. It cannot acquire registered property such as real estate. To buy a building, the association first has to convert to full legal capacity by notarial deed.

Does a director stay liable after leaving the board?

Yes, for debts arising from legal acts performed during his term, to the extent that no sitting director is liable for them. Registration in the commercial register limits this liability to cases where the association itself will not pay.