Duties and obligations of the foundation council
The duties and obligations of the foundation council primarily arise from the foundation charter or the regulations on organisational structure. It is common practice for the foundation council to be responsible for overall management of the foundation. It must attend to the affairs of the foundation and act in the name of the foundation.
Generally, the organisation of a foundation can be freely determined by the founder (see blog entry). The sole legal requirement is that the supreme governing body of the foundation does the accounts and employs auditors. In practice, the creation of a foundation council as the supreme body within a foundation has become the established norm.
Duties of the council
If not otherwise regulated by the foundation charter or foundation regulations, the foundation council has the following duties (non-exhaustive list):
- Overall management of the foundation: The goal of the council must be to achieve the purpose of the foundation to the best of their ability.
- Managing and using the assets/endowment: Its use must be orientated to the foundation’s purpose and the foundation council has no discretionary power in this regard,
- Management or supervision of management: The choice of body which is in charge of management largely depends on the organisational structure of the foundation.
- Managing the accounts and creating an annual report and annual financial statements.
If the foundation council is the supreme body within the foundation (this is not mandatory but, in practice, is most often the case), it is entitled to all the powers that are not expressly delegated to other bodies in the statutes (foundation charter and regulations). There are also three inalienable duties of the foundation council:
- Regulating signing authority and power of representation of the foundation
- Choosing members for the foundation council and audit team (Art. 83b Para. 1 ZGB)
- Approving annual statements (Art. 83a ZGB).
The members of the foundation council must be entered into the commercial register (see blog entry).
Foundation council obligations
The members of the council are subject to the statutory duties of loyalty, confidentiality and diligence. The content of the duty of loyalty conforms to the statutory provisions of employment law, depending on organisational structure, (Art. 321e OR) or those of contract law (Art. 398 OR). Both stipulate the principle that the legitimate interests of the foundation must be observed.
An essential component of the duty of loyalty is safeguarding entrusted knowledge. This means all secrets that have become known to the foundation council over the course of its activities and which the foundation wishes to maintain as confidential. The manner in which said secrets were attained by the foundation council is of no importance. The obligation to exercise diligence is based on the benchmark of what would be expected of an average person with the same experience and education. Therefore, a foundation council must exercise the same care as would be expected from a conscientious and knowledgeable agent in the same position while attending to the business activities entrusted to him/her.
