Replacement foundation auditor after a breakdown of trust: court-ordered change

Section 14(1) PSG expressly lists the foundation auditor as an organ of the private foundation. Under section 27(2) PSG, the court must remove an organ member where the foundation deed provides for it or an important reason exists. The provision identifies serious breach of duty, inability to perform the duties properly and certain insolvency or enforcement situations as important reasons in particular.

The phrase breakdown of trust therefore describes the conflict first. The application must explain the concrete breach or impairment of performance behind it. A mere disagreement with the audit result does not normally establish that basis.

Under section 20(1) PSG, the foundation auditor is appointed by the court or, where applicable, by the supervisory board. Appointment of a replacement is therefore a separate organ decision. The application should distinguish the requested removal from the person or firm proposed for the next appointment.

The proposed auditor must meet the statutory qualification and independence requirements. Section 20(2) and (3) PSG exclude, among other relationships, certain connections with the foundation, beneficiaries and other organ members. Those requirements should be checked before the proposal is filed.

An important reason must be assessed in the circumstances of the particular mandate. A documented serious breach of duty or facts showing an inability to perform the audit properly may be relevant. A statutory independence issue may also determine the next procedural step.

Each allegation should be tied to a verifiable event such as a letter, deadline, audit report, resolution or request for information. General accusations make the court assessment harder and can obscure the actual audit issue.

The application should first set out the existing appointment and organ position. It should then explain the specific reasons for removal and identify the supporting records. A separate part should show why the proposed replacement is qualified and independent.

The existing organ position generally continues until the court decides. The foundation should therefore record the ongoing audit, outstanding information requests and upcoming steps separately. An internal instruction does not replace a court order removing or appointing the auditor.

For matters assigned to the court by the PSG, section 40 PSG generally refers to the court of first instance with commercial jurisdiction at the foundation's registered seat. Unless the matter is assigned to contentious proceedings, it is dealt with in non-contentious proceedings.

The starting file should include the foundation deed, appointment record, current register entry and relevant audit file. Add the communications concerning the conflict, specific reports or statements and the replacement auditor's independence declarations.