preface

At the end of 2020, the Management and Supervision of Legal Persons Act (Wet Bestuur en Toezicht Rechtspersonen – WBTR) was adopted by the Senate. This concerns a number of changes and additions to the regulations for legal persons in Book 2 of the Civil Code. The Act has now been published in the Official Gazette (Staatscourant). From July 1, 2021, this Act will come into effect. The WBTR is aimed at improving the legal framework for legal persons, in particular for associations, cooperatives, Mutual Guarantee Societies (Onderlinge Waarborg Maatschappijen – OWMs ) and foundations.

An important point is that the Act now creates the possibility for all legal persons to establish a supervisory board (raad van commissarissen). Until now, the supervisory board only had a basis in the Dutch Civil Code for the NVs , BVs, Coöp and OWM. Where foundations and associations have already arranged a supervisory board (raad van toezicht) on the basis of their articles of association, it may continue to be called that. However, it must be checked whether this voluntarily established body meets the standards of the new Act. Contrary to the two-tier board model, all legal entities can also opt for a one-tier board model with executive and non-executive directors.

Supervisory directors at NVs and BVs had an obligation to act in the interests of the legal entity and the associated company for a long time, and for directors of NVs and BVs this obligation was already included in the first WBTR in 2013. An important point in the new Act is that this obligation is now anchored in the Act for all directors and supervisory directors of all legal entities.

Board

For the NV and BV it already applies that there must be a statutory regulation for the absence or inability to act of the director. This obligation will apply to all legal entities. It is stipulated that the person who, in the absence or inability to act of the director, performs his duties with regard to the necessary administrative actions is equated with a director.

The new Law provides that the directors have an advisory vote in the general meeting. The purpose of this advisory vote is to give the directors the opportunity to express their views on the resolutions proposed by the general meeting, so that the shareholders or members can take that view into account. At present, the advisory vote is only legally regulated for the NV and the BV. The regulation applies to all legal entities having a general meeting.

Voting rights are further regulated in the case of a multi-person board. The articles of association will soon be able to provide that a director appointed by name or in function will be granted more than one vote. However, a director cannot cast more votes than the other directors combined. If there is now a regulation in the articles of association whereby one director can cast a majority vote, this provision must be amended at the first amendment to the articles of association. Such a provision in the articles of association is null and void after no more than five years.

In addition, the Act provides clear regulations for holding directors and supervisory directors liable in the event of bankruptcy. All directors are now jointly and severally liable for damage as a result of maladministration. The new Act also provides a uniform regulation for the liability of directors by the bankruptcy trustee. The Act declares these regulations to apply mutatis mutandis to supervisory directors. In terms of content, the proposed provisions are largely the same as the regulation for liability in the event of bankruptcy that already applies to most legal persons. The scheme concerns the liability of directors and supervisory directors towards the estate, and the claim can therefore only be instituted by the bankruptcy trustee.

Foundations

In the old legislation, there was no obligation for the foundation to include a regulation in the articles of association in the event that a director or supervisory director has a conflict of interest. The existing obligation for other legal entities to protect the interests of the legal entity is now extended to the foundation. This means that for all legal entities, directors with a conflict of interest are not allowed to participate in the deliberation and decision-making on the subject in question. The proposed scheme contains a supplement for directors and supervisory directors of a foundation. The reason for this is that the foundation does not have a general meeting. For foundations it is therefore stipulated that if the foundation does not have a supervisory board, the authority remains with the board, even in the event of a conflict of interest of the directors. If there is a supervisory board, the same applies. For both, however, it applies that they must record in writing the reasons underlying the decision.

The lack of a body comparable to the General Meeting as exists with limited liability companies and associations means that foundations do not have a principal stakeholder who can intervene if management and supervision fail. Therefore, traditionally, supervision rested to a certain extent with the judge, who had the option to dismiss a foundation board at the request of an interested party. But the grounds for dismissal have always been interpreted in a very limited way in case law. In the new Act it has therefore been decided to modernize the rules for the dismissal of management and supervisory directors at foundations. In the future, a board of the foundation can, for example, be dismissed for neglect of its task, for other weighty reasons or for seriously changed circumstances on the basis of which his stay on board can no longer be tolerated.

What does the WBTR mean for the works council?

The consequences of the new rules will differ per company. The works council can put the subject on the agenda in a general sense in the article 24 consultation and there discuss what the concrete consequences will be for the administrative structure of the organization.

If the new legislation requires amendment of the articles of association, the right to consult on the basis of article 25 will often also be at issue in addition to the consultation right. Certainly when it comes to changes in the relationship between management and supervisory directors or changes in the voting proportions within the management.

The works council must already gain insight into the division of powers within the management board and between the management board and the supervisory board at the beginning of its term of office. Changes therein, insofar as not subject to an advisory obligation, must be notified immediately to the works council. And of course the works council can use its information right to ask what changes are necessary to comply with the WBTR within 5 years.