Do you have to amend your articles of association due to the new Management and Supervision of Legal Entities Act?

The Management and Supervision of Legal Entities Act will enter into force on 1 July 2021. How does this affect the articles of association of your foundation, association or cooperative association?

The Management and Supervision of Legal Entities Act (MSLEA) will enter into force on 1 July 2021. This brings a lot of changes for associations, foundations, cooperative associations and other legal entities. Why should you have checked your articles of association by a lawyer?

Why amended articles of association?

Due to the introduction of the MSLEA, the law for associations, foundations and cooperative associations is aligned as much as possible with that for NVs and BVs. This may have several consequences for the articles of association:

1. Provisions in the articles of association have to be amended based on the MSLEA.
2. Provisions that are not in line with the MSLEA, may be automatically  invalidated from 1 July 2021. It is wise to also amend or delete such provisions in order to avoid confusion.
3. It is now becoming mandatory to include a number of things in the articles of association, that did not need to be included before. So have assessed whether you already have included an arrangement about this or whether it has to be added.
4. The Act includes a number of new rules that are in force as a standard. In some cases it is possible to deviate from them, but such a deviation must be named. If this is not done, your organization will be bound to the statutory regulation.

In the following an overview of important provisions from the Management and Supervision of Legal Entities Act is given. On the basis of this you might have to amend your articles of association.

Conflict of interest

The Management and Supervision of Legal Entities Act regulates what must happen if a director of a foundation, association, cooperative association or mutual benefit organization has a conflict of interest.

On the basis of the Act, a director with a conflict of interest must refrain from voting on management decisions. In the event all directors have a conflict of interest, the decision will be taken by the supervisory board or the general meeting. As there is no general meeting in a foundation, the supervisory board will be competent. If there is no supervisory body, the management will remain competent. In that case, it is important for the management to record in writing the reasons for the decision.

Although the statutory regulation applies if nothing has been regulated in the articles of association, it is wise to align the articles of association regarding this point with the MSLEA. So confusion can be avoided. In addition it can be included in the articles of association which body is competent to take the decision if the management has a conflict of interest.

Prevention from acting and absence

From 1 July 2021, it will be mandatory to include a prevention from acting and absence arrangement in the articles of association. This contains arrangements for cases in which a director is absent or prevented from acting. You have to include this arrangement in the following amendment of the articles of association in conformity with the MSLEA.

Supervisory board (Raad van Commissarissen)

Although it is already possible to establish a supervisory board for associations and foundations, there is still no legislation governing the powers of a supervisory board. Until 1 July 2021, this depends on what is provided in the articles of association. On the basis of the MSLEA, the supervisory board is granted statutory powers, such as the possibility to suspend directors.

If you do not want the supervisory board to be granted such powers, you will have to arrange this in the articles of association. This point will enter into force immediately from 1 July 2021. So if you wish to amend the articles of association regarding this point, this must be done quickly.

More information?

Would you like to know whether your organization is ready for the new Management and Supervision of Legal Entities Act? Do you want to have your articles of association checked? Or do you have any other questions about the MSLEA?  Please contact us: