Forum Judgment and Association Law: What to Do?

Questioner

Dear, The forum ruling applies to both public limited companies (NVs) and private limited companies (BVs). What about a deadlock within an association? I can't find any ruling or legal source indicating that the forum ruling can also be used within an association. Because where is the final say within the (cooperative) association, if the board and the AGM cannot reach an agreement? Yours sincerely

Questioner

I would say that the Forumbank ruling, although the case in question concerned a company, also applies to an association. But I don't think that answers your question. To determine whether a specific decision falls within the authority of the board or the general meeting of shareholders, you should first consult the law and the articles of association. Any regulations drawn up within the association could also be relevant.

Questioner

The nature of the decision must be considered here. The Forumbank judgment distinguishes between the powers of the board of directors and the shareholders' meeting. Decisions that typically fall within the board's authority cannot be overridden by the meeting. The meeting cannot issue instructions to the board of directors in such cases. Forumbank applies, in principle, to both public limited companies (NVs) and private limited companies (BVs). The Forumbank ruling can certainly be applied to an association. However, in my opinion, it's often clearer in an association that the board generally has the power, with the exception of a few standard decisions (appointment and dismissal, dissolution, amendments to the articles of association, etc.). Members of an association are completely different from shareholders of a private limited company (BV/NV), and the law provides fewer provisions regarding members and their powers. The association's articles of association may stipulate that the general meeting (AGM) is authorized to make decisions in certain cases, but here too, the board is responsible for the association's day-to-day policy, for example. The AGM cannot regulate or enforce administrative matters without the board's consent. In my experience, the standard articles of association often contain nothing (no list of resolutions), and the law doesn't grant the meeting the same powers as it does in a private limited company (BV/NV). Most decisions in an association fall to the board, unless the articles of association stipulate otherwise. A few notes: If it was customary to always submit certain decisions to the General Meeting, the General Meeting may reasonably demand that they be allowed to make decisions in those cases, even if the articles of association do not state anything about decision-making by the General Meeting; - if the above is not the case and the board reaches an impasse/deadlock, this does not automatically mean that the AGM is authorised. A solution to a board deadlock is to dismiss the board and appoint a new one. A general meeting typically has this authority and is included in the standard articles of association.

Questioner

The nature of the decision needs to be considered here. The question sounds like an exam question, if you ask me ;-) The Forumbank judgment distinguishes between the powers of the board of directors and the shareholders' meeting. Decisions that typically fall within the board's authority cannot be overridden by the meeting. The meeting cannot issue instructions to the board of directors in such cases. Forumbank applies, in principle, to both public limited companies (NVs) and private limited companies (BVs). The Forumbank ruling is difficult to apply to a cooperative. In a cooperative, the board's power is usually very limited. Often, the board handles only minimal matters such as membership administration, chairing meetings, financial administration, and representing the cooperative for minor or minor matters. However, if the board consists of members, the meeting has more authority to decide and more power to instruct the board, allowing for more direct management and/or assignments. This distinction must be clearly documented. It's common for members to reach an agreement on certain matters related to the cooperative. This agreement is often the governing body. The board, which consists of members, is responsible for adhering to the agreement. However, the board is not obligated to implement decisions it disagrees with, for example, if a decision could lead to bankruptcy. If the board cannot make a decision, the question then becomes what kind of decision it is and whether it is not regulated by the cooperative agreement. If the board consists of members, this deadlock can, of course, be resolved more easily. However, the cooperative's daily policy is the responsibility of the board. Members cannot regulate or enforce administrative matters without the board's approval. Other matters covered by the cooperative agreement, where the board consists of members, can be handled more easily. If it concerns a typical board decision and the members of the co-op have no real say, the last resort is for the co-op to dismiss the board and appoint a new one.

Questioner

double

Questioner

My first post pertains to the association. I couldn't edit my answer. The second post pertains to the cooperative.