Director of a Dutch association or foundation? Beware of conflict of interest as of 1 July 2021

On 1 July 2021 the new Management and Supervision of Legal Entities Act (WBTR) will enter into force. As a director  or board member of a Dutch association or foundation (paid or voluntary) you must then be mindful of the conflict of interest phenomenon.
As of 1 July 2021, the rules on conflicts of interest already applicable to Dutch corporations as BVs and NVs will also apply to foundations, associations, cooperatives and mutual societies. This means that if a management board member has a direct or indirect conflict of interest with regard to a particular matter, he/she may no longer take part in the deliberations or decision-making of the management board. If he/she does, the decision may be annulled and thus become an impugnable decision. However, this has no consequences for the counterparty of the association or foundation. A board member’s conflict of interest will therefore not affect the contracting parties.
A conflict of interest exists if, due to the presence of (A) a personal interest or (B) due to his involvement in another interest which does not run parallel with that of the company, the management board member cannot be considered capable of safeguarding the interests of the company and its affiliated enterprise in a manner that may be expected of a management board member with integrity and without prejudice. There must actually be an interest that makes it impossible for the director to be guided solely by the interests of the company. Examples are: Doing business with affiliated companies of the board member, or selling a part of the company or the entire company to a third party, while the director himself also has shares in that company and thus benefits financially from it, or joins the other party at a lavish salary.
It is important to examine the current articles of associaton so that it becomes clear which provisions need to be amended or supplemented.