Current legal regulations in association and foundation law to combat the effects of the COVID-19 pandemic

If the articles of association or other regulations of associations and foundations with legal capacity do not already contain provisions on other, e.g. virtual options for holding meetings and passing resolutions of the association's bodies, this often has consequences for their ability to act.

In particular, this can lead to serious problems if resolutions of general meetings or foundation councils are currently required and affects all associations and foundations with legal capacity: For example, in addition to (social) enterprises organized as associations or foundations, the many sports and music clubs as well as (other) associations from the leisure sector have the same problems in this regard. Interest groups and other associations, which are often organized as clubs, are also affected by this problem.

This is exacerbated by the fact that it is not yet clear how long the respective association or foundation bodies will not be able to hold their meetings and adopt resolutions in the conventional, face-to-face manner of a physical meeting or assembly of the body members. Furthermore, in addition to fundamentally necessary current and sometimes urgent resolutions such as restructuring, amendments to the articles of association, approval of measures by the Executive Board, etc., the term of office of association and foundation bodies, in particular Executive Boards, may also end during this time. As the respective board of directors legally represents the foundation or association with legal capacity to the outside world and also generally manages its business, the foundation or association with legal capacity to the outside world could be left without management if the respective responsible appointing body - i.e. generally the association's general meeting or a foundation body such as a foundation council - is unable to extend the term of office or appoint another person in good time. It is often the case that the (association or foundation) articles of association contain provisions that allow board members to remain in office after the expiry of their term of office until their appointment is extended, another person is appointed as their successor or the previous office holder is dismissed or resigns. However, this only applies if and insofar as this is expressly stipulated in the applicable articles of association.

Some associations have also stipulated in their articles of association that so-called virtual or online general meetings (can) be held, for example.

On March 25, 2020, the German Bundestag also passed the "Act on Measures in Corporate, Cooperative, Association, Foundation and Residential Property Law to Combat the Effects of the COVID-19 Pandemic" as part of one of the current coronavirus legislation packages. It came into force on March 28, 2020 and will apply until December 31, 2021. Its special regulation on association and foundation law reads:

"Section 5 Associations and foundations

(1) A member of the board of directors of an association or foundation shall remain in office after the end of their term of office until they are dismissed or their successor is appointed.

(2) By way of derogation from § 32 paragraph 1 sentence 1 of the German Civil Code, the board of directors may, even without authorization in the articles of association, allow association members to

1. to participate in the general meeting without being present at the meeting venue and to exercise membership rights by means of electronic communication or

2. to cast their votes in writing before the general meeting is held without attending the general meeting.

(3) By way of derogation from Section 32 (2) of the German Civil Code, a resolution is valid without a meeting of members if all members have been involved, at least half of the members have cast their votes in text form by the deadline set by the association and the resolution was passed with the required majority."

§ Section 7 (5) of this law stipulates that "Section 5 [...] shall only apply to appointments of association or foundation boards expiring in 2020 and general meetings of associations held in 2020".

With the statutory provision of Section 5 (1) quoted above, which applies to appointments of association or foundation board members expiring in 2020, the legislator solves the problem that associations and foundations may become unmanaged if the appointment of board members cannot be extended by the responsible association or foundation bodies or if another person can be appointed as a board member and there is also no corresponding provision in the articles of association to temporarily remain in this office after the term of office has expired. The appointment of an emergency board of directors by the competent local court in accordance with § 29 BGB is rendered obsolete by this statutory provision for these cases. However, § 5 para. 1 expressly leaves open the possibility that a board of directors of an association or foundation that remains in office on the basis of this statutory provision can also be dismissed.

Furthermore, according to Section 5 (2), this law enables associations to validly hold various variants of the modes of holding general meetings of association members already discussed in the past, such as virtual general meetings, online general meetings and virtual/digital support of a general meeting or virtual/digital participation in a general meeting, and thus bring about valid resolutions of the general meeting, even without a basis in the association's articles of association, in the period up to December 31, 2020. In addition, members of the association can also be enabled by the Executive Board to participate in votes without attending the General Meeting - for example by using electronic means of communication. § Section 5 (3) contains simplifications to Section 32 (2) BGB, which already allows association members to pass resolutions without a (physical) meeting.

However, before inviting members to a general meeting conducted in this way or a resolution of the association members without a meeting - also on the basis of these new legal provisions - it should be carefully considered on a case-by-case basis which of the variants makes sense at all and how the invitation and implementation can or should be carried out.

Whether Section 5 para. 2 and/or Section 5 para. 3 of this law also allow (without a corresponding basis in the articles of association) the valid holding of board meetings for associations and (legally capable) foundations and the valid passing of resolutions in this way without the physical presence of the board members remains unclear to date - at least according to the explanatory memorandum to the law, as these questions were not specifically addressed in it. According to the wording of these new statutory provisions in conjunction with Sections 27 and 32 BGB - which apply to foundations with legal capacity via the reference in Section 86 BGB - there is much to be said for this. This could in turn be contradicted by the wording of Section 7 (5) of this law, which expressly and only refers to "general meetings of associations held in 2020". On the other hand, according to the explanatory memorandum to the law (BT-Drs. 19/18110, pages 31 and 32), Section 7 (5) is only intended to regulate the "period of validity for the simplifications in association and foundation law". This question will therefore have to be examined in more detail.