The legal status of directors of non-profit organizations: important changes

Administrative responsibilities

There is much greater clarity about the exact roles and responsibilities of directors. They must carry out their duties with the care of a prudent and diligent director, within the limits of the law and the organization's bylaws, and with the best interests of the company in mind. If this is not the case and directors are negligent, they may be held liable for their actions. These principles regarding directors' responsibilities already existed in case law and legal doctrine concerning NPOs, but today there is much more certainty due to the explicit inclusion of these rules in the legislation. This provides greater legal security and clearer guidelines regarding directors' liability.

Liability of directors

Directors of an NPO can be held liable, both civilly and criminally, for damage resulting from negligence or misconduct in the course of their management. Therefore, having an adequate directors' liability insurance has become crucial.

Flexibility in governance structure

The legislation offers more flexibility in the organization of governing bodies within an NPO. It is now possible to establish an executive committee or appoint directors with specific powers, allowing the governance structure to be better tailored to the needs of the organization.

Information and transparency

Directors are required to prepare an annual activity report and publish it along with the annual accounts and balance sheet. This promotes transparency towards members and the public, ensuring clear communication about the NPO's financial and operational status.

Remuneration

If explicitly stated in the bylaws and justified in light of the organization's objectives, it is possible to grant directors reasonable compensation for their work. If directors are not compensated, the governing body may award volunteer allowances. If all directors wish to receive such compensation, the general meeting has the right to decide. If directors are compensated, it is also the general meeting that decides on the remuneration. In all cases, the compensation must be in line with market standards, and a form 281.30 must be issued.

For specific tasks outside the director's mandate, a separate compensation may be granted, with the governing body deciding on the matter. However, the director concerned is not allowed to decide on their own assignment.