Important legislative change: what does the WBTR mean for combat sports?

The new Management and Supervision of Legal Entities Act (Wet bestuur en toezicht rechtspersonen, WBTR) takes effect on 1 July 2021. This has consequences for associations and foundations, including sports federations and gyms with one of these legal forms. Among other things, it is laid down that in the event of bankruptcy every board member may be held fully liable in cases of improper management. An amendment to the articles of association is also required.

What changes?

The Act mainly concerns what the board does and the liability of board members. Its aim is protection against improper management. The new Act requires the articles of association to be amended. If you follow the steps below, your organisation will meet the obligations.

Step 1. Amendment of the articles of association

The legislative change means that the articles of association must be amended. They must state what has to happen if all board members drop out, for example because some are ill and others resign. Who may then take decisions? A ‘continuity committee’ may be established for this purpose, for instance.

The following provision may then be included in the articles of association:

In the event of the absence or inability to act of all board members, management is temporarily vested in the continuity committee, or in the persons designated by that committee. For the acts of management performed during this period, the designated persons are treated as equivalent to a board member.

Federations are free to arrange continuity in another way, as long as this remains within the framework of the law. The actual amendment does not have to be implemented before 1 July 2021, but it does have to be made at the first subsequent amendment of the articles of association after that date. Amendment of the articles of association will, however, become a requirement of the VA for the 2022 Covenant. Federations should therefore treat 31 December 2021 as the final date for amending their articles of association.

Step 2. Governance in line with the (new) statutory requirements

From now on, everyone must comply with the following new statutory provisions. For sports federations, the VA will include in the 2022 Covenant that they have also added these passages to their articles of association:

In performing their duties, board members must act in the interests of the association. In the event of a conflict of interest, a board member may not take part in the deliberations and decision-making on the subject concerned.

Board members always have the right to advise the general meeting on a decision to be taken. This also applies if the board members are subsequently allowed to vote themselves as members.

A board member may not cast more votes in a board meeting than the other board members combined.

If the nomination for a board position contains one candidate for a position to be filled, a decision on the nomination results in the candidate being appointed, unless the binding nature of the nomination is removed.

Step 3. Do we want to change the way our management and supervision are organised?

Associations and foundations are not obliged to have a supervisory board. This is an option worth serious consideration only for large organisations. If such a decision is taken, the rules for this can now also be found in the new Act.

The same applies to introducing a distinction between supervisory and executive board members, the so-called one-tier board. This distinction could already be made, but it has now also been given a statutory basis for associations and foundations. This may be relevant to the (limitation of) liability of board members who govern at a distance from day-to-day practice. Here too, this is mainly relevant for large organisations, such as federations where a board is not usually involved in day-to-day activities.

Step 4. Further measures to limit the risk of liability for board members

In the event of the bankruptcy of a legal entity, from 1 July every board member is jointly and severally liable to the estate for the deficit if the bankruptcy is the result of improper management.

A board member is not liable if they prove that the improper management is not attributable to them and that they have not been negligent in taking measures to avert its consequences.

A passage on this must also be included in the articles of association, for example:

“In the event of the bankruptcy of a legal entity, every board member is jointly and severally liable to the estate for the deficit if the bankruptcy is the result of improper management. A board member is not liable if they prove that the improper management is not attributable to them and that they have not been negligent in taking measures to avert its consequences.”

Explanation

The video below explains the background to the WBTR and the most important changes. It also sets out the statutory obligations arising from this new Act. Please note: the VA's requirements for the 2022 Covenant for sports federations may differ from the statutory obligations mentioned.