The board of the association

The most important bodies of an association are the board and the general meeting. The board is responsible for the management of the association, unless restricted by provisions in the articles of association. It also holds the authority to represent the association. The general meeting has the power to appoint directors. A board member may be suspended or dismissed by the general meeting at any time.

Division of responsibilities and board duties

The board appoints a chair, secretary and treasurer from among its members. The board’s main responsibility is the financial management of the association. By law, the board is required to maintain accounts and to prepare annual financial statements at the end of each financial year. The board also represents the association in its dealings with third parties and is responsible for organising the general meeting, to which it reports annually.

Representation

The board has unlimited and unconditional authority to represent the association, unless otherwise provided by law. The power of representation determines who may legally bind the association to third parties. Only the law may limit or permit limitations to this authority.
Under the articles of association, the authority to represent the association may be granted to one or more directors – possibly in conjunction with one or more other individuals – or to third parties (non-directors).

Conflicts of interest

The recently introduced Dutch Act on Management and Supervision of Legal Entities (WBTR) contains provisions governing conflicts of interest for board members. A board member may not take part in discussions or decision-making regarding a resolution in which they have a conflict of interest. A conflict of interest is any direct or indirect interest of the individual concerned that is in conflict with the interests of the legal entity and its affiliated business. A board member may inform fellow board members or the membership, but must strictly refrain from participating in the discussion or decision-making process.

If a board member does so regardless, interested parties (members or even contracting parties) may seek annulment of the decision – potentially through legal action – on the grounds of the conflict of interest. Annulment only has internal effect and does not affect the legal validity of the agreement entered into, unless the contracting party was aware of the conflict of interest (for example where the board member of the association is the same person as the board member of the counterparty).

It is possible to include in the articles of association a provision that transfers decision-making authority in the event of a board member’s conflict of interest to another body (such as a supervisory board).