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The changed position of the director of a foundation

As of July 1, 2021, with the introduction of the Act of Administration and Supervision of Legal Persons (“WBTR”), the legal position of the director of a foundation has changed. With the enactment of the WBTR, the legal position of a director of a foundation has become equal to that of a director of a B.V. (Ltd) or N.V. (plc) and the threshold for dismissing a director of a foundation will be reduced.

A decision taken by the foundation’s supervisory body, dismissing a director from his or her statutory duties will, under the new legislation, also result in the termination of the director’s employment contract. For a valid decision making process, it is important that the meeting at which the dismissal is to be considered is called in a timely manner, that the reasons for the dismissal are communicated and that the director of the foundation is given the opportunity to defend him- or herself against the proposed decision at the meeting. The statutory or contractual notice period must also be taken into account with regard to the termination of the employment contract. If, after the dismissal is given, the director still wishes to contest the validity of the dismissal, he or she will have to initiate proceedings. Because, under the WBTR, it is no longer possible to claim reinstatement of the employment contract, the only possibility is to claim a compensation payment. In addition to dismissal by the supervisory body, any stakeholder may also apply to the court for the dismissal of a director. This is possible if, for example, the director neglects his or her duties, for other significant reasons or in the event of a drastic change of circumstances on the basis of which the continuation of the directorship can no longer be reasonably maintained.

Other important consequences of the enactment of the WBTR for the director of a foundation are that the statutory period for reflection of 14 days when concluding a settlement agreement has expired, that the same standards apply to the director’s liability as those that apply to directors of a B.V. or N.V. and that the court (rechtbank), instead of the subdistrict court (kantonrechter), is competent to adjudicate on proceedings regarding the employment of the director.

The purpose of the WBTR is to create clarity through equality of rules among legal entities and to reduce impasses regarding the position of the director of a foundation.

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