The Act on the governance and supervision of legal persons (Act) entered into force on the 1st day of July 2021. The bill on the governance and supervision of legal persons must provide clarity about the duties and responsibilities of directors and supervisory directors of an association, foundation, cooperative or mutual insurance society.

The Act has been a topic of discussion in our blogs a several times. This time an important point is highlighted in the context of the Act with regard to the prevent and absence arrangement of directors.

Absence and prevented

Absence and prevented are the formal terms used to indicate the absence of a director. Failing this, a director is no longer in office due to, for example, death, resignation or dismissal. Due to his absence, a vacancy arises for the board position.

If a director is temporarily unable to perform his function, for example due to vacation or illness, he is prevented from doing so. There is then no vacancy and the ‘restricted’ director remains a member of the board.

The introduction of the Act has made it mandatory that the statutes of a foundation and association must contain a provision on the way in which the exercise of duties and powers is provisionally provided for in the event of absence and inability to act on all board members.

The previous regulation relates to the inability or absence of all directors. A statutory provision for the inability or absence of only a part of the directors is optional. The same applies to any supervisory board.

 Are you curious whether your articles of association comply with this new law? Please contact us.