Part IV: Foundations and international not-for-profit associations

Foundations (“stichtingen” / “fondations”) and international not-for-profit associations (“internationale verenigingen zonder winstoogmerk” / “associations internationales sans but lucratif”) are currently governed by the NPO-Law of 27 June 1921 (Titles II and III). Today, both legal entities benefit from a large degree of flexibility when it comes to the functioning of their governing bod(y)(ies). Only a limited number of mandatory legal provisions needs to be taken into account. We are pleased to see that the new Code maintains this flexibility in a nearly identical manner.

The most fundamental change for not-for-profit associations that is introduced by the new Code, i.e. the abolition of the restriction on economic activities, equally applies to international not-for-profit associations and foundations. For the latter, however, this change will have a more limited impact, as also today foundations are authorized to engage in (more than subordinate) economic activities, provided certain conditions are met.

Provisions common to all legal entities

Like not-for-profit associations (“verenigingen zonder winstoogmerk” / “associations sans but lucratif”), foundations and international not-for-profit associations are subject to the provisions of Book II of the new Code which sets out the provisions applicable to all legal entities. Foundations and international not-for-profit associations are therefore also subject to the new rules on e.g. directors’ liability, nullity, dissolution and liquidation.

As far as the dissolution of foundations is concerned, we consider it a missed opportunity that, also under the new Code, a foundation can still only be judicially dissolved, and not through a voluntary dissolution.

International not-for-profit associations

The new Code imposes compliance with a conflict of interests procedure on all not-forprofit associations and foundations. The international not-for-profit association, however, as the only not-for-profit legal entity, is not subject to this obligation. The explanatory memorandum to the new Code does not provide for any justification for this exception.

Notwithstanding the absence of a legal obligation, many international not-for-profit associations adhere to a conflict of interests (or a declaration of interests) procedure and have included such a procedure in their articles of association or their internal rules.

For consistency purposes, the Code no longer refers to the “general management body” (“algemeen leidinggevend orgaan” / “organe général de direction”) of an international not-for-profit association, but to the “general assembly” (“algemene vergadering” / “assemblée générale”).

Foundations

According to the NPO-Law, the board of directors of a foundation shall be composed of at least 3 directors. Under the new Code, it will be possible for a foundation to only have 1 director. This possibility has been introduced essentially in order to increase the attractiveness of the (private) foundation in the context of private estate planning. In case more than 1 director is appointed, the directors will act as a collegiate body.

Generally, as regards foundations and not-for-profit associations, references to the “board of directors” have been replaced by references to the “management body”. For international not-for-profit associations this was already the case.

In next week’s newsletter, we will discuss the new rules applicable to the cooperative company (“coöperatieve vennootschap” / “société coopérative”).

Your contacts of the Curia Corporate and Not-for-profit team:

Yvette Verleisdonk, partner (yvette.verleisdonk@curia.be)

Sarah Verschaeve, partner (sarah.verschaeve@curia.be)