Foundation board and liability
Appointment, removal, remuneration and liability of the foundation board: duties of care, conflicts of interest and responsibility towards the foundation.
The foundation board runs the private foundation and is liable for prudent management. It consists of at least three members, of whom at least two must have their habitual residence in a Member State of the European Economic Area.
Beneficiaries and their close relatives are excluded from board membership. This is meant to keep the board from becoming an instrument of the beneficiaries. We advise foundation boards on their day-to-day work and represent them in disputes.
Appointment, removal and remuneration
The foundation declaration governs how members are appointed and removed. During the founder’s lifetime the founder typically has a decisive influence. After the founder’s death appointment procedures often lie with the advisory board or the board itself.
The commercial register court can remove board members for gross breach of duty on application, in particular of beneficiaries. Remuneration should be agreed transparently, be based on customary market levels and be documented.
Duty of care and liability
Board members act with the diligence of a prudent and conscientious business person. They must serve the foundation purpose, safeguard the assets and manage conflicts of interest. Breach of duty can lead to liability for damages towards the foundation.
The typical scenarios of dispute concern investment decisions, asset transactions with the founder’s environment or non-transparent distributions. A resolution documented in writing and clean conflict management significantly reduces the risk.
- Diligence of a prudent and conscientious business person
- Board must serve the foundation purpose and preserve assets
- Written documentation of resolutions is a central control
- Conflicts of interest with founder and beneficiaries need clear procedures
Interaction with advisory board and auditor
Where the declaration provides for an advisory board, its powers of consent and control must be observed. The foundation auditor examines the annual accounts and reports on them. Anyone who does not take advisory board and auditor seriously exposes themselves to considerable liability.
This overview reflects the Austrian legal position under the Private Foundation Act (PSG) and does not replace advice in the individual case. The specific circumstances of your foundation are always decisive.
What clients often ask.
Can a beneficiary be a member of the foundation board? +
What is the personal liability of a board member? +
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What obligations does the board have towards beneficiaries? +
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Formation and foundation deed
Setting up with a clear architecture: foundation deed, supplementary deed, governing bodies and asset endowment drafted so the foundation delivers what the founder intended.
Founder rights, amendment and revocation
Reserved founder rights secure influence: amending the foundation declaration, revoking the foundation and the limits where several founders are involved or rights have lapsed.
Beneficiaries and information rights
Beneficiaries have rights: information about the foundation, inspection of the foundation declaration and remedies when the board blocks or distributions stop.
Conflict in the foundation, a blocked board, information denied?
In foundation law, structure, deadlines and evidence decide. Call us directly or write to us, callback within one business day.
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BRANDAUER Rechtsanwälte GmbH Giselakai 51 5020 Salzburg
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