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Developments in Foundation Law in Europe pp 193–225Cite as

The Development of the Law on Foundations in the Netherlands

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Part of the book series: Ius Gentium: Comparative Perspectives on Law and Justice ((IUSGENT,volume 39))

Abstract

Although historically foundations in the Netherlands were established for spiritual and idealistic purposes, for more than a century foundations are used for all sorts of purposes with two restrictions: the non-distribution constraint and the no-members constraint. After dealing with the establishment – without government involvement – and registration, the internal structure is looked at. The law (Book 2 title 6 Civil Code) does not regulate much in general. However, in practice many models are developed and also used in legislation in the fields of education, public housing, etc. The civil code has regulated quite in detail procedures for major changes that may happen regarding foundations, like amendment of articles of formation, transformation, merger and demerger, and dissolution. Also these topics are described. As the law does not prescribe internal supervision on the management board, some external public supervision should be provided. Apart from the role the Public Prosecutor, stakeholders and the courts have here, some regulations of external supervision resulting from sector-specific legislation are mentioned. This chapter ends with some concluding remarks about the development of the system.

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Notes

  1. 1.

    Up to the nineteenth century, the question was whether the foundation could be regarded as a separate legal entity or the directors of the foundation could be regarded as trustees of the foundation’s capital. See Asser-Van der Grinten-Maeijer (1997, 458–459).

  2. 2.

    Dutch Supreme Court 30 June 1882, W. 4800.

  3. 3.

    See the literature cited in Asser-Rensen III* (2012/212–213).

  4. 4.

    Act of 22 April 1855, Stb. 32.

  5. 5.

    This applied also to the legal entity church community, but this could only be used by religious organisations.

  6. 6.

    Act of 10 July 1963, Stb. 297.

  7. 7.

    See Article 53 et seq. of the New Dutch Civil Code Transitional Act.

  8. 8.

    Church communities may create ‘ecclesiastical foundations’ as a separate – legal – entity of the church community, which is then governed solely by ecclesiastical law. Cf Dijk and Van der Ploeg (2013, par. 2.2.7).

  9. 9.

    See Duynstee (1978, 60 et seq.) and Wessels (1996, 1 et seq.).

  10. 10.

    Parliamentary Papers II, 2008–2009, 32 003, nr. 2 (draft law on corporate social responsibility), Parliamentary Papers II, 2010–2011, 32 417, nr. 47 (announcement of withdrawal of draft law).

  11. 11.

    See Hopt et al. (2006, 78 et seq.).

  12. 12.

    See Section 3.1 regarding the capital requirement.

  13. 13.

    In addition, the foundation can be transformed into a BV or the business can be split-off as a BV. See Sect. 12.6.

  14. 14.

    See Court of Utrecht 1 December 2010, JOR 2011, 69 commentary from J.M. Blanco Fernández.

  15. 15.

    See De Kluiver (1988, 176 et seq.), Van der Ploeg (1989, 95 et seq.) and Hendriks (1994, 111 et seq.).

  16. 16.

    Rechtspersonen, Overes (Art. 285, note 7).

  17. 17.

    Book 2, Article 304 (2) of the Civil Code specifically states that pension distributions are not prohibited distributions.

  18. 18.

    Contra: Pitlo-Raaijmakers (2006, 674).

  19. 19.

    Asser-Rensen III* (2012/333 and 344) and Dijk and Van der Ploeg (2012, par. 2.3.2).

  20. 20.

    Van der Ploeg (1999, 55).

  21. 21.

    Book 2, Article 286 of the Civil Code, unless the foundation has its registered office in the province of Friesland, in which case the deed can be drawn up in Frisian.

  22. 22.

    Van der Ploeg(2011, 83).

  23. 23.

    Art. 21 (2), 16a of the Dutch Notaries’ Act, see Van der Ploeg (2011, 85).

  24. 24.

    Art. 3 of the Dutch Prevention of Money Laundering and Financing of Terrorism Act (the results of the client investigation must be kept for 5 years).

  25. 25.

    Art. 1 of the Dutch Prevention of Money Laundering and Financing of Terrorism Act.

  26. 26.

    The Monitoring of Legal Entities Decree 2011, Art. 6 (e). Monitoring is carried out by the FIU with the aim of preventing money laundering and the financing of terrorism.

  27. 27.

    Van der Ploeg (2011, 86).

  28. 28.

    Dijk and Van der Ploeg (2013, par. 3.8).

  29. 29.

    Dutch Supreme Court 24 January 1997, NJ 1997/399.

  30. 30.

    Art. 6 Commercial Register Act 2007, if the foundation operates a business, the registration of the business also counts as the registration of the legal entity.

    (Art. 7 Commercial Register Act 2007).

  31. 31.

    Book 2 Article 6 of the Civil Code; Art. 25 Commercial Register Act 2007.

  32. 32.

    Wessels (1998, 45–46), Slagter (1999, 47), Van Veen (2007a, 755–766).

  33. 33.

    Parliamentary Papers II, 2008–2009, 32 003, no. 3, Groeneveld (2004, 47).

  34. 34.

    Code Goed Bestuur voor Goede Doelen, Zorgbrede Governancecode (2010), Code Goed Bestuur in het primair onderwijs (PO-raad, Utrecht 2010), Code Goed Onderwijsbestuur in het voortgezet onderwijs (VO-raad Utrecht 2008), Governance Code Woningcorporaties 2007, Code Cultural Governance, Branchecode Maatschappelijke Onderneming (NTMO) (example codes setting out governance requirements for foundations in the fields of welfare, education and housing).

  35. 35.

    The main principle for compliance with the codes is ‘apply or explain’.

  36. 36.

    ECORYS, Governance in semi-publieke instellingen: welke lessen kunnen we leren uit het buitenland? Final report commissioned by the Ministry for Economic Affairs, Rotterdam 2010; Algemene Rekenkamer, Goed bestuur in uitvoering, De praktijk van onderwijsinstellingen, woningcorporaties, zorgorganisaties en samenwerkingsverbanden, Den Haag 2008.

  37. 37.

    Dijk and Van der Ploeg (2012, par. 3.8), Overes (2011b, 63).

  38. 38.

    Dutch Supreme Court 10 January 1997, NJ 1997/360 (Staleman/van de Ven).

  39. 39.

    Dijk and Van der Ploeg (2013, par. 8.5.1.b).

  40. 40.

    Dijk and Van der Ploeg (2013, par. 8.5.1.b).

  41. 41.

    This observation is in line with the fact that the right of appointment implies a relationship of trust between the person making the appointment and the director whereby – unless the contrary is specified – the power to dismiss must apply at such time as the appointer has lost trust in the director .Dijk and Van der Ploeg (2013, par. 8.5.1.b).

  42. 42.

    Gitmans, Van Wersch (1976, 116).

  43. 43.

    Groeneveld-Louwerse (2001, 9).

  44. 44.

    Act of 6 June 2011, Stb. 2011, 275.

  45. 45.

    Verdam (2011, 28).

  46. 46.

    Book 2 Article 57 (cooperation), 140 (NV) and 250 (BV) of the Civil Code.

  47. 47.

    See the report Governance en kwaliteit van zorg, Raad voor de Volksgezondheid en Zorg, Den Haag 2009.

  48. 48.

    Art. 6.1 Recognition of Welfare Institutions Act Implementation Decree. Being prepared is the Welfare Client Rights Act that more specifically requires the creation of a separate supervisory body in the interests of a clear separation of tasks and powers (Parliamentary Papers II, 2009–2010, 32 402, art. 40).

  49. 49.

    Art. 7 Management of Social Housing Decree in conjunction with Art. 70 of the Housing Act, where a requirement for recognition is that the articles of formation provide for a body, a board of supervisory directors, to supervise the management board and that is authorised to take such steps as are necessary to exercise that supervision. The structure and working methods of the board of supervisory directors are not otherwise described, although such detail will be contained in the draft legislation submitted to the Dutch Lower House in May 2011(Parliamentary Papers II, 2010–2011, 32 769).

  50. 50.

    Report entitled Goed bestuur in de zorg, Ministry of Public Health, Welfare and Sport, Den Haag 2006, p. 15.

  51. 51.

    The creation of a supervisory board is the starting point (Art. 10.3d Higher Education Act (‘WHW’) (technical universities) and 9.8 (special universities) whereby from a philosophical standpoint one could choose for a functional separation of powers (Art. 10.3d (7)/9.51 (3) WHW). In secondary education, institutions may choose between a supervisory board and a one-tier model (Art. 9.1.8. WEB).

  52. 52.

    Art. 17a (1) Primary Education Act, Art. 24d Secondary Education Act, see Overes (2011a), Turkenburg (2009, 88).

  53. 53.

    Dijk and Van der Ploeg (2013, par. 10.1).

  54. 54.

    Lubbers (1983, 8).

  55. 55.

    See Overes (2011b, 71–72) and the literature quoted therein.

  56. 56.

    Van Veen (2007b, 30) and Van der Ploeg (2008, 147).

  57. 57.

    Governance Code Woningcorporaties 2007, Zorgbrede Governancecode 2010, Branchecode Governance Hogescholen (HBO raad, s-Gravenhage 2006) and Goed bestuur in de bve-sector (MBO raad, Woerden 2009).

  58. 58.

    Additional, detailed standards are imposed upon the supervisory bodies of welfare institutions, Parliamentary Papers II, 2009–2010, 32 402, nr. 2, Art. 39 et seq. (draft law on welfare clients’ rights). Likewise for housing associations, for which it was planned to make a legal form of social enterprise compulsory, the detailed rules governing the supervisory body were included in the draft law ‘Amendment law on the recognition of public housing institutions’ (Parliamentary Papers II, 2010–2011, 32 769, nr. 2, Art. 22–39).

  59. 59.

    For more details, see Overes (2011b, 74–81).

  60. 60.

    Dijk and Van der Ploeg (2013, par. 4.3).

  61. 61.

    Asser-Rensen III* (2012/364–365), Dijk and Van der Ploeg (2013, par. 12.3.1).

  62. 62.

    Court of Rotterdam 23 December 2009 RN 2010/38, in which the court held that the notary had acted unlawfully by assisting in the amendment of articles of formation by which third-party rights were harmed.

  63. 63.

    Van der Ploeg (2011, 91).

  64. 64.

    See Appeal Court of Arnhem 9 March 2006, JOR 2006, 121, in which the court held that the amendment proposed by the management board was insufficiently connected to the existing purpose.

  65. 65.

    Book 2 Art. 301 (2) Civil Code; see Supreme Court 12 May 2000, NJ 2000, 439.

  66. 66.

    Dijk and Van der Ploeg (2013, par. 14.1.2).

  67. 67.

    Art. 23b (1) see Dijk and Van der Ploeg (2013, par. 14.4.4).

  68. 68.

    See Sect. 11.7.

  69. 69.

    Association, cooperative, NV and BV.

  70. 70.

    Supreme Court 21 January 2011, NJ 2011, 352 with commentary by P. van Schilfgaarde and H. Beckman.

  71. 71.

    Court of Zwolle 7 February 2003, JOR 2004/2.

  72. 72.

    Court of Arnhem 14 May 1992, NJ kort 1992/45, Court of Zwolle 21 November 2003, JOR 2004/68.

  73. 73.

    Court of Amsterdam 28 April 1998, JOR 1998/105.

  74. 74.

    Art. 996 (b) Code of Civil Procedure.

  75. 75.

    There are two exceptions to this rule applying to the foundation: a foundation may merge with a NV or BV in which it holds all the shares, and it may merge with an association, cooperative ormutual association of which it is the sole member.

  76. 76.

    See Dijk and Van der Ploeg (2013, par.13.8).

  77. 77.

    Book 2 Art. 334j, 334 t, 334 s of the Civil Code.

  78. 78.

    The Public Prosecutor may also request the court to dissolve the foundation if its purpose or work is in breach of public order (Book 2 Art. 20 Civil Code) or if there are any defects in the way in which the foundation was formed or is structured (Book 2 Art. 21 Civil Code).

  79. 79.

    Supreme Court 3 January 1975, NJ 1975, 222 commentary by G.J.S. (Stichting vorming werkende jeugdigen Ede e.o.) and Supreme Court 23 April 2004, JOR 2004, 160.

  80. 80.

    See Dijk and Van der Ploeg (2013, par. 10.3.2.c).

  81. 81.

    This is not the case where articles of formation are amended (Book 2 Art. 294 Civil Code).

  82. 82.

    In the law not the word ‘stakeholder’ is used, but the word ‘belanghebbende’, which means ‘interested person’. The translation ‘stakeholder’ seems however adequate.

  83. 83.

    See Dijk and Van der Ploeg (2013, par. 10,3,3).

  84. 84.

    Supreme Court 25 October 1991, NJ 1992, 149.

  85. 85.

    See Supreme Court 10 November 2006, NJ 2007, 45 and Supreme Court 29 June 2007, LJN AZ7705.

  86. 86.

    See Doorenbos (2010, 422 et seq.).

  87. 87.

    See Klaassen (2010, 257 et seq.).

  88. 88.

    We cannot deal here with the issues regarding regulation of the supervision of fundraising in this context.

  89. 89.

    See Explanatory Memorandum for the draft law, p. 3.

  90. 90.

    In Book 2 Art. 19a (2) of the Civil Code to the words ‘in Section 1 (b)’ can be added the words ‘or Section 1 (c)’.

  91. 91.

    See most recently on theme CBB 27 March 2008, LJN: BC8398.

  92. 92.

    See Van der Ploeg (2005, 8).

  93. 93.

    Act of 15 July 2008, Stb. 303. The Service Provider Identification Act (‘WID’) and the Unusual Transactions Act have been revoked (Art. 49 Prevention of Money Laundering and Financing of Terrorism Act).

  94. 94.

    Act of 7 July 2010, Stb. 280, which, by Royal Decree dated 21 April 2011, Stb. 194, came into effect on 1 July 2011.

  95. 95.

    Formerly the Centrale Justitiële Documentatie (cf. Art. 3 (2) (a) Companies Documentation Act).

  96. 96.

    Further data can include names of spouse, registered partner or life partner, parents, children and grandchildren of the said persons if this is necessary in connection with an analysis of the Legal entity’s network of directors (Art. 4 new Section 3). For implementation and risks, see Toelichting op Besluit controle van rechtspersonen, Stb. 2011, 180, p. 10 et seq.

  97. 97.

    A large amount of information is collated by the Ministry. The question is whether a correct balance has been struck between protecting privacy and combating crime. Cf Doorenbos (2010, 470–471).

  98. 98.

    See Art. 194 (refusal/untrue information filed with insolvency), 205 (foreign military service), 235 (2) (forging documents, untrue declarations, breach of duty to supply information) and 349 (prejudicing of creditors) Dutch Criminal Code.

  99. 99.

    Cf Van der Ploeg (2011, 90).

  100. 100.

    See the failed cases in the Appeal Court of Amsterdam 5 January 2006, JOR 2006, 200 and Court of Leeuwarden 6 March 2007, LJN AZ9940 against chapters of the Hell’s Angels, Supreme Court 26 June 2009, JOR 2009, 222. See also Schmieman (2008, 44 et seq.). The public prosecutor succeeded in Supreme Court 18 April 2014, ECLI:NL:HR:2014:948 regarding the association Martijn.

  101. 101.

    Netherlands Court of Audit, Zicht op overheidsstichtingen;achtergrondstudie, April 2011; Parliamentary Papers II 2010–2011, 31 887, nr. 4.

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  1. Faculty of Law, Vrije Universiteit, Amsterdam, The Netherlands

    C. Helen C. Overes & Tymen J. van der Ploeg

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  1. C. Helen C. Overes
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Correspondence to Tymen J. van der Ploeg .

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  1. Independent legal scholar and consultant on foundation and non-profit organization, Turin, Italy

    Chiara Prele

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Overes, C.H.C., van der Ploeg, T.J. (2014). The Development of the Law on Foundations in the Netherlands. In: Prele, C. (eds) Developments in Foundation Law in Europe. Ius Gentium: Comparative Perspectives on Law and Justice, vol 39. Springer, Dordrecht. https://doi.org/10.1007/978-94-017-9069-7_11

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