Information about the Corporate Governance and Supervision Act

The new Corporate Governance and Supervision Act (WBTR) will come into effect on 1 July 2021, and is intended to improve the governance and supervision of associations and foundations.

 

What is the WBTR?
The Dutch Corporate Governance and Supervision Act (WBTR) is intended to improve the governance and supervision of associations and foundations. It establishes rules regarding duties, powers, obligations, and liability. The government aims to use the law to prevent mismanagement, irresponsible financial management, self-enrichment, abuse of position, and other undesirable activities from harming associations and foundations.

 

Amendment of the Articles of Association
The WBTR (Dutch Association of Chartered Accountants) is requesting a reassessment of the role of the organization's board members and the inclusion of the new obligations in the articles of association. Whether the articles of association need to be amended depends on how the board and its supervision are structured and what the articles of association currently contain. If the articles of association need to be amended, this does not need to be done before July 1st. Amendments to the articles of association can still be made for up to five years after the introduction of the WBTR. During that period, the Act will prevail over the organization's own articles of association.

1. What is your governance model?

Most volunteer organizations have a collegial board. All board members are and have an equal vote. Only in the event of a tie does the chairperson have a casting vote. This is often already stipulated in the articles of association. 

 

2. What rules apply to liability claims?

A director is legally obligated to perform their duties properly. If improper management occurs and damages are incurred, the director can be held liable for those damages. This does not apply to minor errors, but to seriously culpable conduct. The WBTR (Financial Supervision Act) is very clear: in the event of bankruptcy, directors guilty of fraud or other forms of serious negligence can be held jointly and severally liable.

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

 

3. The interests of the organization itself come first

The WBTR obliges directors and supervisors of associations and foundations to focus on the interests of the legal entity and the associated organization when fulfilling their duties.

 

4. A conflict of interest arrangement

A director must at all times decide in the interests of the organizations.

A board member with a conflicting or personal interest in a board decision will not participate in the deliberations or decision-making process. If all board members in an association have a conflicting interest, decision-making authority shifts to the association's general meeting.  

 

5. Regulation limiting multiple voting rights

The WBTR (Wageningen Act) sets rules for multiple voting rights for directors of associations and foundations. For both associations and foundations, a director will no longer be able to cast more votes than all the other directors combined. Limiting multiple voting rights contributes to the quality of governance in associations and foundations and prevents a single director from pushing their own agenda.  

 

6. Absence and impediment regulations

The WBTR requires organizations to include an absence and impediment provision in their articles of association. An absence occurs when a director ceases to be a director. Impediment refers to the situation in which a director is temporarily unable or prohibited from performing their duties. Such a provision is intended to allow the organization's activities to continue in the absence of one or more board members. It is customary for the remaining directors to be (temporarily) responsible for management in the absence of one or more directors. In the event that only one director remains or all directors have left, the General Meeting is responsible for appointing a person to manage the organization. 

 

7. Binding nomination

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

to appoint a director. This binding nature of the nomination can be lifted by the General Meeting by a two-thirds majority. 

 

8. Advisory vote

Under the WBTR, association directors have an advisory vote at general meetings. This allows directors to present their views on proposed decisions at the AGM, ensuring their opinions are taken into account. If directors are not given or unable to provide their advice, the decision can be reversed. The same applies to decisions taken outside of the AGM. 

The articles of association do not impose any restrictions on our directors. All directors are involved in all decisions and can provide advice both to the board and at the general meeting. 

 

Ultimately, all associations (including smaller ones with volunteer board members) will be impacted by the new law's impact on their work and liability. By properly documenting agreements and rules, the risk is minimized.

This is beneficial for both current and future board members. Before accepting 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 interests of the association. If this doesn't happen and something goes wrong, every board member is personally liable. This doesn't just apply to the board member who violated the rules. The board must indicate and document how the association will ensure compliance. Because the WBTR not only imposes obligations but also imposes sanctions, it's crucial that an association can demonstrate that it has everything in place. All board members must be familiar with the new law and its implications for them personally. As a board, you are responsible for taking all necessary measures to ensure the association complies with the law.

Source: www.wbtr.nl

 

We, the Zwartewaterwiede tenants' association, are currently working on amending the internal regulations regarding the following:

• Finances (handling declarations and payments),
• Conflict of interest (Interest of own organization first)
• Multiple voting rights
• Impediment and absence
• Supervision
• Binding nomination
• Advisory vote

 

The WBTR was also discussed at the General Members Meeting.

When the Rules have been fully adapted to the WBTR, they will be posted on our website.