What are the implications of the WBTR?
As of July 1, 2021, the Administration and Supervision of Legal Persons Act, or WBTR for short, became active.
This law was created due to numerous incidents and abuses that occurred in recent years. This had to do with poor governance.
The purpose of the WBTR is professionalization by, among other things:
- Improving governance and supervision of associations and foundations
- To prevent mismanagement, irresponsible financial management, self-enrichment, abuse of positions and other undesirable activities, harm associations and foundations.
- Driving good governance
This covers associations, foundations, cooperatives and mutual societies. VVEs and denominations are excluded from the WBTR.
What's new in the law as of July 1, 2021?
Liability in bankruptcy (Article 2:138 paragraph 1 and 3-10 BW)
In bankruptcy, it may immediately be assumed that there has been mismanagement and the trustee may proceed immediately. The directors and/or supervisors may be held liable.
Joint and several liability (Article 2:9 BW).
This means that the entire board is liable and could have prevented the mistakes. Here, private assets may also be seized.
These matters must be discussed and recorded by July 1, 2021. There is a 5-year transition period for fixation in the bylaws.
What needs to be regulated/determined for the new law?
- Good governance
- Liability
- Absence and Absence
- Multiple voting rights
- Supervision
- Binding nomination (Association)
- Consultative vote (Association)
- Resignation board
- Statutes
Good governance for financial matters
- Focus: all decisions should be in the best interest of the association or foundation
- Transparency
- Visualizing risk management: both short- and long-term
- Accountability: sharing decisions with members
- Democracy: keeping to the law
- Effectiveness
- Integrity
Liability, both internal and external liability
Internal: liability of board members from within their own organization
External: from outside, for example, a contractor who cannot be paid.
Do you need help complying with the new law?
If you need help complying with the new law, you can hire legal counsel. Keep in mind, however, that the hourly cost is high.
The IVBB has created a roadmap to comply with the new law. They guarantee it will take 3 hours to research and record. The cost is €120 with a discount code, provided you are registered with the umbrella organizations. This can be found on the website. Without discount code, the one-time fee is € 240.
Figuring everything out yourself is also an option, but this takes a lot of time and ultimately a lot of money.
How do these changes affect directors' liability insurance?
For now, it does not affect liability insurance coverage. The policy terms adjust to the law.
Presumably a clause will be placed on the policy that WBTR must be met. If requested, this must be able to be demonstrated to the company. As a result of the WBTR, an increase in the number of claims is expected. This has everything to do with the extra scrutiny within foundations/associations and by the handles of the law to be held liable.
This reinforces the importance of directors' liability insurance.
Calculate director liability insurance premium here
We can be reached via chat, WhatsApp, phone or email
Questions? Contact us if you want to know more.
We are here Monday to Friday from 08:00 to 18:00.