Information about the Management and Supervision of Legal Entities Act

As of July 1, 2021, the new Act on Management and Supervision of Legal Entities (WBTR) will come into effect, which is intended to improve the management and supervision of associations and foundations.

 

What is the WBTR?
The Management and Supervision of Legal Entities Act (WBTR) is intended to improve management and supervision of associations and foundations. Rules have been drawn up about tasks, powers, obligations and liability. The government wants the law to prevent mismanagement, irresponsible financial management, self-enrichment, abuse of positions and other undesirable activities from harming associations and foundations.

 

Amendment of the statute The WBTR
asks to reconsider the role of the board members of the organization and to record the new obligations in the statutes. Whether the articles of association need to be adjusted for this depends on how the management and supervision of the board is structured and what the articles of association currently say about this. If it is necessary to amend the articles of association, this does not have to be done before 1 July. Amendments to the statutes can still be made up to 5 years after the introduction of the WBTR. At that time, the Act takes precedence over the own statutes.

1. What governance model do you have?

Most voluntary organizations have a collegial board. All board members are and have an equal vote. Only in the event of a tie can the chairman have a casting vote. This is often already laid down in the statutes. 

 

2. What rules apply to liability?

A director is legally obliged to perform his duties properly. If there is improper management and damage occurs, the driver can be held liable for that damage. This is not about minor mistakes, but seriously culpable actions. The WBTR is very clear: in the event of bankruptcy, directors who are guilty of fraud or other forms of serious neglect of duties can be held jointly and severally liable.

Directors have an obligation to perform their duties properly and can be held accountable for this.  

 

3. Interest of the own organization comes first

In the WBTR, directors and supervisors of associations and foundations are obliged to focus on the interests of the legal person and the organization associated with it when performing their duties.

 

4. A conflict of interest arrangement

A director must make decisions in the interest of the organizations at all times.

A board member who has a conflicting or personal interest in a board decision does not participate in the deliberations and decision-making thereon. If all directors in an association have a conflict of interest, the decision-making power shifts to the general meeting of the association.  

 

5. Regulation on limiting multiple voting rights

The WBTR provides rules on multiple voting rights for directors of associations and foundations. For the association and the foundation it applies that a director cannot cast more votes than the other directors together. The limitation of multiple voting rights contributes to the quality of the management of associations and foundations and prevents one director from getting his or her own way.  

 

6. Absence and absence regulation

The WBTR obliges organizations to include a non-disclosure and impediment arrangement in the statutes. Absence occurs when a director ceases to be a director. Prevented refers to the situation in which a director is temporarily unable or not allowed to perform his function. Such an arrangement is intended to allow the activities of the organizations to continue in the absence of one or more board members. It is customary for the other directors to be (temporarily) charged with the management in the absence of one or more directors. In the situation where only 1 director is left or all directors are gone, the General Meeting is instructed to appoint a person who manages the organization. 

 

7. Binding nomination

When there is only 1 candidate when appointing new directors, this candidate is generally decided as

appoint a driver. This binding nature of the nomination can be lifted by the GMM by a 2/3 majority. 

8. Advisory voice

Under the WBTR, directors of associations have an advisory vote in general meetings. In this way, board members can give their views on intended decisions in the GMM, so that this is taken into account. If directors do not get or do not have the opportunity to give their advice, the decision can be reversed. The same applies to decisions taken outside the GMM. 

The articles of association do not contain any restrictions for our directors. All directors are involved in all decisions and can give advice both in the board and in the GMM. 

 

Ultimately, all associations (including smaller associations with voluntary board members) will have to deal with the influence of the new law on their work and liability. By properly recording agreements and rules, the risk is minimized as much as possible.

That is good for incumbents, but also for future board members. Before they say 'yes' to a board position, they will check whether the association complies with the WBTR.  

 

What do you need to know as an association?

The WBTR assumes that every board member always serves the interest of the association. If that does not happen and something goes wrong, each board member is personally liable. And not just the board member who has not adhered to the rules. The board must indicate and record how the association ensures this. Because the WBTR not only imposes obligations, but also links sanctions to them, it is therefore important that you as an association can demonstrate that you have arranged everything properly. All board members must be familiar with the new law and its implications for them personally. As a board, you have the task of taking all measures so that the association complies with the law.

Source: www.wbtr.nl

 

We, the Zwartewaterwiede tenants' association, are currently working on adjusting the house rules with regard to the following components:

• Finance (handling declarations and payments),
• Conflict of interest (Interest of own organization comes first)
• Multiple voting rights
• Inhibition and absence
• Supervision
• Binding nomination
• Advisory voice

 

The WBTR was also discussed at the General Members Meeting.

When the House Rules have been fully adapted to the WBTR, this will be placed on our website.

 

Directors' liability insurance is still being investigated.

 

If you would like to know more about this new law, please visit the following website:

https://hvdsl.nl/wbtr-webinars

 

On the aforementioned website you will find 3 short webinars (18, 24 and 29 March) that you can watch and where this law with all parts is very clearly explained.

In addition, you will also find the corresponding presentations of these webinars.

And a lot of “frequently asked” questions with answers.

 

Remark:

We hope that these webinars are still on this website, as the law will come into effect on July 1, 2021.