News / 30.08.2013

Members of foundation boards do not commit violations of duty by not complying with Trustors’ instructions if the board members could be personally liable

According to a recent ruling by the Obergericht (the Liechtenstein court of second instance), Members of foundation boards may not be dismissed if they refuse to comply with orders set forth by a Trustor in the event that these orders might lead to grave personal conequences on the part of the board members.

According to a recent ruling by the Obergericht (the Liechtenstein court of second instance), Members of foundation boards may not be dismissed if they refuse to comply with orders set forth by a Trustor in the event that these orders might lead to grave personal conequences on the part of the board members.

The reasoning for this ruling was as follows: Even though a Trustor may have rights to give instructions to members of foundation boards arising from a fiduciary relationship, the members of the board still have interests that are deemed to be deserving of protection.

Such interests can be of financial nature, for example when it comes to avoiding economic loss due to personal liability in fiscal matters. But other areas of life can also be deemed worthy of protection, for example avoiding travelling restrictions resulting from the threat of an arrest.

According to the court, the refusal of instructions in order to safeguard aforementioned interests, does not constitute a breach of violation and consequently does not justify the dismissal of foundation board members.

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