Unlawful deregistration of a director of a foundation
It happens in the best foundations: falling-out between directors. A recently issued ruling of the court of North Netherlands shows that it is not always that easy to dismiss a fellow director from the board of a foundation. Dutch corporate lawyer Marco Guit discusses this case.
Actions of the board of directors contrary to the articles of association
In this case a director of a foundation, after a falling-out with the other two directors, unilaterally had the other two directors deregistered from the trade register. Also, he had two other persons registered as directors. The deregistered directors did not agree and claimed in preliminary relief proceedings that the other director has them registered again in the trade register within seven days and ensures that the newly registered directors are deregistered. The director who is still registered argued that the other directors stated, in an e-mail conversation between the three directors, that they resigned. Because he was then left as sole director, he could have them deregistered and register the new directors, according to this director.
No resignation by the directors
The articles of association of the foundation stipulate, among others, that the membership of the board of directors is terminated by the decease or resignation in writing by the directors. After the falling-out between the directors, several e-mails were sent back and forth, in which the two directors who had not yet been deregistered at that time stated, among others, that they were considering resigning their positions and that it might be better “to give it all up”. The court rules that this wording does not mean that the deregistered directors actually resigned. The fact that there was an obvious deadlock within the board does not change this. As the deregistered directors did not explicitly resign, they should still be considered directors of the foundation. The deregistration of the still registered directors from the trade registered by the director who was still registered was therefore unlawful. By deregistering these directors, the director still registered acted wrongfully towards the still registered directors and the director must therefore reverse the deregistration.
Unlawful deregistration: directors still acting
The court rules as follows on the registration of the two new directors. The articles of association state that an appointment of a new director has to be decided unanimously. Because the two directors were unlawfully deregistered, they still have to be viewed as directors of the foundation. Therefore the deregistered directors should have had the opportunity to vote on this. The registration of the new directors was unlawful, because contrary to the articles of association.
Corporate lawyer in Amsterdam
When deregistering directors always beware that this is done according to the articles of association. If this is not the case, the deregistration can be unlawful under certain circumstances and can be reversed by the deregistered directors. AMS Lawyers has a great deal of experience in litigation and consulting in cases where there is a falling-out between directors (of a foundation).