A director's mandate... to have enough members
March 2021 – Being a director of a company or a ASBL/VZW has legal consequences, even if you only exercise this mandate pro forma or as a service to a friend. The Court of Cassation confirms that an individual director is required to supervise co-directors, even if this was not the real purpose of his mandate.
Late declaration of an ASBL/VZW
The tax authorities attack the directors of a not-for-profit organisation that has filed its tax return late. One of the directors is worried, because he certainly is the treasurer of the ASBL/VZW, but he accepted the position of director only so that the minimum number of directors is reached. The person in question also proves that the chairman of the board of directors was in charge of the association and that since the creation of the ASBL/VZW he himself had never signed any documents or performed any other administrative acts.
For the Antwerp Court of Appeal it was sufficiently proven that "in the given circumstances, the late tax return could not be charged to the defendant". It therefore relieved the director of his liability.
Tax authorities go to the Supreme Court of Appeal
The tax authorities referred the matter to the Court of Cassation because, in their view, this nuance is not in the law.
And the Court of Cassation follows the strict point of view of the tax authorities.
Under both the old and the new legislation, all powers that are not expressly reserved by law to the general meeting are within the competence of the board of directors.
The articles may, however, place restrictions on the powers attributed to the board of directors. However, such restrictions, as well as the distribution of tasks which the directors may have agreed upon, shall not be binding on third parties, even if they are published.
The Court goes on to state that the administration of a ASBL/VZW must be entrusted to a collegial board of directors, which means that each individual director is required to supervise the co-directors. The fact that a division of duties has been agreed upon among the directors or that a director has not himself applied for the position of director or that a director appropriates the administration does not in any way detract from this obligation.
Friend service
This is no way to escape directors' liability. With its ruling, the Court of Cassation has moreover broken three "excuses" that are often put forward:
1. The first argument often put forward concerns the division of tasks between directors. Even if the directors agree, for example, that one will take care of finance, another will take care of marketing, yet another will take care of HR, etc., this does not mean that they escape collective liability;
2. A second argument concerns the pro forma appointment or appointment to do a favour for a friend (to reach the sufficient number of members). Indeed, sometimes a person accepts the role of director in order to reach the required number of members. The fact that this person does not subsequently intervene does not relieve him/her of his/her obligation to supervise the other directors ;
3. Finally, a third excuse: the president holds the reins. Although this is the reality and it may be impossible for some directors to supervise (either because of lack of interest or because the other director(s) prevent(s) them from doing so), they do not escape the responsibility of being a director.
If you cannot supervise the other directors, you should either make a written reservation against the way you work or, perhaps most effectively, resign.
