Reinier advises national and international companies
reinier.russell@russell.nl +31 20 301 55 55On 1 July 2021, the Act on Management and Supervision of Legal Entities entered into force. What has changed for foundation directors? What is their legal position now?
Since 1 July 2021, a major part of the law for BVs and NVs has also been applicable to foundations, a legal entity that is often used by charities. There is, for example, a regulation in case of conflict of interest of foundation directors. In addition, the dismissal regime for foundation directors who also have an employment contract with the foundation has been changed. What does the dismissal procedure for foundation directors under the Act on Management and Supervision of Legal Entities (Dutch: Wet bestuur en toezicht rechtspersonen; Wbtr) look like?
Appointment and dismissal of a statutory director of a foundation is regulated in the by-laws. As a foundation has no members, the power to dismiss often lies with the board itself. In addition, this power may be vested in a supervisory body. Directors who have been appointed by a decision of the board or a supervisory body are referred to as statutory directors.
To be able to dismiss a statutory director of a foundation, both the corporate relationship and the employment relationship must be terminated. Before the entry into force of the Wbtr, a decision to dismiss the statutory director of a foundation only terminated the legal relationship; any employment relationship continued to exist. A statutory director of a foundation enjoyed the same dismissal protections as a regular employee. This meant that a statutory director of a foundation could only be dismissed with the consent of the UWV or the subdistrict court.
The Wbtr has aligned the rules for dismissal of a statutory directors of foundations with those of statutory directors of BVs and NVs. A dismissal decision made by the competent body of a foundation does not only terminate the corporate relationship with the foundation’s director, but also the employment relationship. This is only different if there is a prohibition on giving notice, such as in the case of illness. However, the statutory director of a foundation may be entitled to fair compensation if the dismissal decision was made without reasonable grounds. The fair compensation is an addition to the transition compensation. The amounts involved can be substantial. Reinstatement in the employment contract by the court is not possible.
The rules for dismissal of a statutory director of a foundation at the request of the Public Prosecution Service or an interested party have also been extended. Since 1 July 2021, the court can dismiss statutory directors of a foundation if they neglect their management task. In addition, dismissal may be granted for serious reasons or a drastic change of circumstances. These are open standards that case law will have to specify in detail.
Do you need advice on the dismissal of a foundation director? Or would you, as a foundation director, like to know what your rights are under the Wbtr? We will be happy to help you. You can also contact us if you have a conflict in the field of corporate law and employment law. Please contact:
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