Can a director of a foundation give an assignment to a private company with limited liability that he is a director of as well?
In such cases, there is a conflict of interest.
There are no legal rules on this if it concerns a foundation. At present, the rules applied are for foundations are the “rules on conflicts of interest” that apply for public limited companies and private companies with limited liability. These rules stipulate that a director may not participate in the deliberations and the decision-making process if he has a direct or indirect personal interest that conflicts with the interest of the company and its business.
With public limited companies and private companies with limited liability, these rules concern the decision-making process; they do not provide for the representation of the company. This means that a conflict of interest does not affect the representative authority of the relevant director.
The new Dutch Legal Entities (Management and Supervision) Act (Wet bestuur en toezicht rechtspersonen) (involving changes to Book 2 of the Dutch Civil Code) is expected to be implemented in 2016. This will cause the rules on decision-making to apply to all legal entities, including foundations. With regard to conflicts of interest, the law will be in line with the existing rules for public limited companies and private companies with limited liability.
In other words, be careful in the event of a conflict of interest. We advise not participating in the deliberations and the decision-making process. However, a conflict of interest does not affect the representative authority of the director.
If you have a question about this subject, you can contact Justin de Vries.
