Management and Supervision Act (part 1): liability of directors of foundations and associations

On 1 July 2021, the Management and Supervision Act (in Dutch: WBTR) will enter into force in the Netherlands. What does this Act mean for entrepreneurs? In a number of articles SPEE advocaten & mediation will guide you through the most important changes. This week: directors' liability for foundations and associations.

We regularly publish articles on the liability of directors of BVs (private limited companies) and NVs (public limited companies). We then discuss liability in case of ‘serious culpability’. But the liability of directors (and supervisory directors) of foundations and associations was not entirely clear.

It is already known that these officers can be held liable under Article 2:9 BW (the general basis of directors' liability) or under the tort of Article 6:162 BW. This also applies to the non-commercial foundation and association.

The WBTR introduces an additional legal basis for directors' liability for formal commercial associations and commercial foundations. It concerns liability in case of bankruptcy on the basis of Section 2:138 of the Dutch Civil Code. The regulations for formal commercial associations and commercial foundations will therefore be in line with the regulations we already have for BVs and NVs.

This entails that if the board has not fulfilled the obligation to keep records OR if the annual accounts have not been published on time, the manifestly improper management (or improper supervision) is irrefutable. In those situations, it is therefore suspected that this improper performance of duties is an important cause of the bankruptcy. The latter is however refutable.

This applies to executive and supervisory directors of an association or foundation that is subject to corporate income tax, or that is semi-public and has an obligation to produce annual accounts. The presumptions do not apply to directors and supervisory directors of non-commercial associations and foundations. They can still be liable in case of bankruptcy, but then the trustee has the burden of proof.

Questions about the WBTR and/or directors' liability? Ask the corporate lawyers of SPEE lawyers & mediation.

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