Disputes in Foundation Administration

When an Administration Dispute Interrupts the Foundation's Business

An inability to hold meetings, unsigned resolutions or a reduction in the number of administrators may halt a foundation's banking and property transactions. Not every disagreement requires removal proceedings. The foundation category, current deed, composition of governing bodies and nature of the disputed resolution are established first. The founder's intention and the foundation's current needs are read together.

The administrative body of a new foundation is constituted under its deed. Where positions become vacant through death, resignation or another cause, the deed's vacancy-filling provisions apply first. Vacancies in a body and an equal split of votes on a single resolution are different situations. The number and location of vacancies affect preparation of the application.

What Do the Deed and Governing-Body Records Show?

The founding deed and all amendments, latest election or appointment decisions, terms of office, meeting notices and signed minutes form the basis of the file. The representation arrangements must establish who can conduct banking or title transactions. Someone having acted for the foundation for a long time is not accepted as authorised merely through customary practice.

VGM guidance describes court application procedures for certain vacancies where the deed provides no solution or the competent body cannot achieve the required voting majority. A written opinion from the supervisory authority and a subsequent necessary deed amendment may be relevant. Not every deadlock can be resolved using the same number or petition. The need to change the organisation, administration or operations for justified reasons is examined separately.

Authority, Loss and Interim Protection Are Distinct

Whether a resolution was passed by the competent body and whether an administrator caused the foundation loss are different allegations. Claims for removal, correction of representation arrangements, deed amendment and damages may involve different parties and evidence. For example, filling a governing-body vacancy does not by itself resolve the validity of an earlier sale.

If there is an approaching payment, expiring contract or property transfer, the date and documentary evidence must be communicated clearly. The need for protection is assessed against a specific transaction and risk rather than a general concern. Existing records are preserved; minutes are not retrospectively manufactured for a meeting that did not take place. Complete correspondence between the parties provides a sounder basis for assessment than selected messages alone.

If a power of attorney is to be prepared, the capacity of the body passing the resolution and signing authority are verified separately. An administrator who is a party to the dispute may have a personal interest conflicting with the foundation's representation interests. The person for whom legal services will be provided is therefore clarified before document examination begins.

Preparing Resolutions and Applications

The deed, administration records and dispute chronology are read together to identify which resolution or application may be required. If proceedings are pending, the existing claims and interim orders are assessed before a new lawsuit is commenced. The written opinion specifies the steps to consider so that the foundation can continue its essential business and the additional records to investigate.