On Nov. 10, 2020, the Senate passed the Administration and Supervision of Legal Entities Act. This changes the rules for cooperatives, foundations, associations and mutual insurance companies, among others. And it will do so as of July 1, 2021.
Among other things, the law results in the following changes:
It becomes possible for associations/foundations to establish a supervisory board;
Foundations/associations will soon also be subject to provisions of BV/NV law on "proper management" and liability in bankruptcy for improper management;
The position of director or supervisory director with a conflict of interest will be regulated;
Clarification by courts of the rules for dismissal of a foundation director.
As a director (or supervisory director), you can no longer obtain a majority of votes (or more than the other directors/supervisory directors combined).
As co-director of a regionally operating cooperative general practice with about 100 affiliated general practitioners, I only just realized how relevant the Management and Supervision of Legal Persons Act is becoming.
For now, the 2017 Healthcare Governance Code provides a form of self-regulation with meaningful guidance for governance. As with the Management and Supervision of Legal Entities Bill, professionalization and clarification of your role and responsibilities as a director or internal supervisor are central. Both regulations use supervisory board and supervisory board as interchangeable.
As a director, you remain obliged under current law and according to the Management and Supervision of Legal Entities Act to perform your duties properly. Although current law does not regulate the proper performance of your duties as a director or supervisory director of cooperatives, for example, case law sometimes does judge your supervision to be improper. For example, in a bankruptcy situation, a trustee in bankruptcy can hold you, as a director or supervisory director, liable for improper management. For example, if you have filed the annual accounts too late and it is suspected that this is a major cause of the bankruptcy.
The Administration and Supervision of Legal Entities Act contains a presumption of proof on the basis of which you as director or supervisory director of cooperatives, among others, can be held liable for improper performance of duties both in and outside of bankruptcy. This will expose you as a director or supervisory director to faster (and thus greater) risk, because the presumption of proof no longer requires bankruptcy.
As a director or supervisor, you need to be aware of the potential consequences of failing supervision. In both the for-profit and non-profit sectors, it has long since ceased to be a job of honor. Make sure that you take note of relevant industry-specific governance codes or codes of good governance. More importantly, make sure that you act accordingly and invest the time and energy to do your job properly.
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