The Management and Supervision of Legal Entities Act, in Dutch the WBTR, brings the rules on management and supervision for associations, foundations, cooperatives and mutual insurance societies into line with those for the BV and the NV. It has applied since 1 July 2021 and operates by law, even without an amendment to the articles.
Legal basis
The Act amended Book 2 of the Dutch Civil Code on several points. All legal entities are now subject to the rule that directors and supervisory directors must be guided by the interests of the entity and its organisation. The conflict of interest regime has been made uniform: a director with a direct or indirect personal interest conflicting with that of the entity does not take part in the deliberation and decision-making. Associations and foundations have also been given a statutory basis for a supervisory board and for the one-tier board model. The liability standard in insolvency has been extended to directors of all legal entities.
How it works in practice
The most concrete requirement is the absence and inability provision: the articles must state who decides where directors or supervisory directors are absent or unable to act. Where that provision is still missing, it must be included at the next amendment of the articles. It is also sensible to review the conflict of interest rule and the voting restriction, under which one director may not cast more votes than all the others combined.
Where it goes wrong
Many foundations and associations assume they need do nothing until they amend their articles, and so overlook that the liability rules already apply. A second failing is not recording decision-making where there is a conflict of interest; without minutes it cannot be shown afterwards that the director concerned abstained. Third, a director who does vote in such a case renders the decision voidable.
Related terms
The Act feeds into the articles of association, conflict of interest, directors’ liability and the supervisory board.
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