Researchers advise rolling back Dutch liability laws for non-profit boards

Researchers from the University of Groningen and the University of Amsterdam have recommended partially repealing provisions of the 2021 Management and Supervision of Legal Entities Act (WBTR). An evaluation commissioned by the Scientific Research and Data Centre (WODC) found that the expansion of personal liability during bankruptcy to directors and supervisors of non-commercial associations and foundations lacks sufficient justification.

The study notes that the regulation is rarely utilized in practice, with researchers finding only one case in published jurisprudence. Furthermore, the law is creating a ‘chilling effect’ by discouraging volunteers from taking on leadership roles in organizations such as sports clubs and charities. While the researchers suggest maintaining regulations for semi-public institutions requiring financial accountability, they advise reversing the broader liability measures for non-profits.

Additional recommendations include clarifying the legal definition of ‘conflicting interests’ and mandating that directors report such conflicts. The researchers also proposed strengthening the position of supervisory boards in foundations and reforming the automatic five-year ban on board service following judicial dismissal, suggesting instead that judges should have the discretion to determine the duration of such bans.