When people start an initiative, it is always possible that an accident or damage occurs. When this happens in an unregistered organisation, those people are liable for the damage: they need to take responsibility for damage that was caused due to the initiative. Therefore, it is smart to take some steps to transfer this liability to the organisation itself so your private assets are safe.

Creating an association or foundation with full jurisdiction

It is possible to create an association or foundation with full jurisdiction. This implies that the board members are not liable for the debts or damages an association or foundation might have. Registering your organisation as a form with full jurisdiction requires visiting a notary and registering in the Chamber of Commerce (KvK).

Establishment of an association with limited jurisdiction

If you choose to register as an association, you have the possibility to choose between an association with full jurisdiction or limited jurisdiction. When choosing for an association with limited jurisdiction, you register at the Chamber of Commerce yourself without visiting a notary since you don’t have to write statues for your organisation.

The benefit of an association with limited jurisdiction is that you are able to register at the Chamber of Commerce by yourself and therefore are able to open a bank account under the name of your organisation. This gives you the opportunity to apply for funds and grants, without following the long and expensive procedure of visiting a notary to write statues.

📢 However, when choosing the legal form of an association with limited jurisdiction, the liability stays for the most part within the board members of the association. That means that the costs and damages that are made, will often have to be paid and taken responsibility for by the board members of the organisation. Your private assets are more at stake in this case than when you register as an association with full jurisdiction.

❗A foundation always has full jurisdiction. There is no possibility to choose for limited jurisdiction.

Exceptions to the transfer of liability in organisations with full jurisdiction

When choosing for an association or foundation with full jurisdiction, the liability shifts towards the organisation itself. However, there are some very important exception to keep in mind!

• Board members are liable for debt/damage in the case of mismanagement. In the case of bankruptcy, the trustee (or someone who manages or oversees the organisation) can appoint the (previous) board to be liable.
• Board members are liable for debt/damage when the board members have not been officially registered with the KvK’s Commercial Register. Therefore, it is important to inform the KvK about your board changes within 8 days. Previous board members who are still registered in the KvK can still be held accountable for potential debts.
• In an association, the members of an association have to approve the annual report and implemented policies during the general members meeting. Approved? The board is no longer collectively responsible.

<aside> 💡 Further steps for liability: do not forget the alcohol and drugs policies, the rules of conduct, an organised administration, registration in the Handelsregister, the BTA insurance (Business Travel Accident insurance) and event insurance. These things all help to avoid problems.

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