Advisory board and supervisory bodies

The advisory board is not required by law and can be freely shaped. It typically has consent, control or nomination rights. It becomes critical where beneficiaries dominate the advisory board and the advisory board influences the board too strongly.

Courts have repeatedly demanded that no more than half of the members of an advisory board with far-reaching board influence come from the beneficiary group. Otherwise the boundary to a beneficiary board is regarded as crossed.

A supervisory board is mandatory only in special constellations, in particular where the foundation has employees above certain thresholds. Its powers follow largely the model of stock corporation law.

The foundation auditor is required by law and audits the annual accounts. In practice it also has an early warning role for the board and the advisory board. Serious concerns of the auditor are almost always a warning sign for beneficiaries and courts.

A well-designed advisory board holds different interests in a stable balance: founder family, external professional members and, where appropriate, individual beneficiaries. Rules on quorums, chair and rotation prevent factions from paralysing the body.