In 2023, a discussion arose within the board of Stichting Bospop, the foundation responsible for organising the well-known pop festival in Weert, about the desired management structure. Until then, the foundation had a traditional model with a full board, but four of the seven board members argued for the introduction of a so-called one-tier model. This model involves executive and supervisory board members working within a single governing body. There was considerable disagreement and the three board members who voted against the proposal were dismissed for breach of trust. Was this justified, according to the court and the court of appeal?

Facts

During a vote, four board members spoke in favour of introducing the One-tier model. The three other board members were strongly opposed and expressed their dissatisfaction not only during the meeting, but later also in writing, in a very detailed and critical letter. In the letter, they stated that the decision-making process had not been transparent and also strongly criticised the performance of their fellow board members. This letter led to open discord within the board.

Proceedings: court and court of appeal

The three dissenting members were dismissed by the board shortly afterwards. They subsequently took legal action, arguing that the dismissal decision was null and void or voidable. Their main argument was that the sole purpose of the dismissal was to pave the way for the introduction of the one-tier model.

The court ruled in their favour in the first instance: the dismissal was deemed to be improper and insufficiently based on valid grounds. Furthermore, the court found that the dismissal was in breach of the applicable internal regulations. We previously wrote about this ruling in the attached article.

The dismissal decision was overturned by the court.

However, on appeal to the Court of Appeal in 's-Hertogenbosch, Stichting Bospop was ultimately proven right. The court ruled that the letter from the three dissenting members, with its many points of criticism and accusatory language, could be interpreted by the board as a motion of no confidence. According to the court, this constituted an irreparable breach of trust, which was sufficient justification for dismissal.

Legal framework

The court emphasises that mutual trust and a willingness to cooperate are essential to the functioning of a foundation's board. Although criticism or differences of opinion are permissible in themselves, the manner in which such criticism is expressed can lead to a serious disruption of mutual relations.

The legal standard of reasonableness and fairness within legal entities plays a crucial role in this regard. The court ruled that the other board members could reasonably and fairly conclude that continuing to work with the three opponents was no longer possible.

Significance of the ruling for practice

This case illustrates, on the one hand, that the dismissal of board members of a foundation cannot be taken lightly, but also that a substantive dispute – when accompanied by damaging and accusatory communication – can result in lawful dismissal. The focus is not so much on the policy issue itself (in this case, the introduction of the one-tier model), but on the basis of trust and the manner of cooperation and communication within a board.

This ruling sends an important signal to foundations and associations. In the event of deep-seated conflicts within a board, it is essential that communication remains careful and collegial, even in the event of strong differences of opinion, that people are aware of their obligation to work together in the interests of the legal entity, and that timely intervention (e.g. through mediation) can prevent a difference of opinion from escalating into a breach of trust and dismissal.

Read the full decision here .

Conclusion

Administrative disputes and dismissal proceedings involving board members can have far-reaching consequences for the continuity and reputation of a foundation or association, but also for the board members involved. The employment law and corporate law specialists at SPEE advocaten & mediation and the experienced business mediators have extensive experience with these types of issues and advise both board members and organisations in conflicts concerning cooperation, governance and dismissal.