Discharge of the foundation board: effect, liability release and limits

A discharge usually means that an authorised body or person approves the board’s management for a defined period. Its legal effect cannot be determined from the heading alone. Wording, authority, foundation declaration, information available and the specific facts must be read together.

Discharge must therefore be distinguished from approval of annual accounts, consent to a particular transaction and an express waiver of a specific claim. Those statements may have different requirements and reach. A short sentence in the minutes does not automatically answer all of these questions.

The first practical question is who made the statement and on what legal basis. The basis may be found in the foundation declaration, a reserved amendment or consent right, an organ power or an agreement. Without a sound authority, a resolution cannot bind the foundation in an unlimited way.

Discharge does not replace continuing organ responsibility. The board manages and represents the private foundation, safeguards its purpose and must comply with the foundation declaration. These duties follow from section 17(1) PSG regardless of any later discharge.

Before assessing a discharge, read the current foundation declaration and any supplementary deed in full. They may contain consent rights, amendment rights, beneficiary rights or special rules for appointing and removing the board. A discharge cannot be assessed from an isolated line in the minutes.

The identity of the person making the statement is equally important. A founder, beneficiary, advisory body or other organ can act only within its statutory and foundation-law authority. Mere economic proximity to the foundation does not give someone power to waive claims belonging to the foundation.

The wording should reveal the period, the management measures covered and the documents disclosed. The more general the language, the more carefully it must be checked whether a specific legal consequence was intended and whether the authority covered it.

Section 19 PSG concerns remuneration of board members. Setting or paying remuneration is not the same as granting a discharge. Nor does a proper payment automatically approve all other management measures.

In 6 Ob 14/24p, the Supreme Court considered a discharge in connection with the removal of foundation board members. It left open whether such a structure is permissible on the basis of a reserved right to amend the foundation declaration and whether it could affect removal under section 27(2)(1) PSG. It nevertheless stated that such a statement could cover only facts known or necessarily known to the person making it at the time.

The information position at the date of the statement is therefore central. If important events were concealed, inaccurately described or only partly explained, the discharge cannot readily be treated as approval of those events. Later discovery is not merely an additional date; it may limit the reach of the statement.

The relevant file should preserve reports, annexes, minutes, audit findings, emails and indications of conflicts of interest from that time. The question is not only which documents were formally delivered, but which facts the person making the statement could actually recognise from them.

A discharge that identifies reservations or open matters must be assessed differently from a statement made after full clarification. Open reviews, pending disputes and transactions not finally assessed should be clearly described in the resolution.

Under section 29 PSG, each member of a foundation body is liable to the private foundation for loss caused by a culpable breach of duty. The liability review must therefore address the particular duty, fault, loss suffered by the foundation and causation. An economically adverse result alone is not enough.

A discharge may be evidence of the information and assessment available at the time. It does not automatically remove every issue from review. If a matter was not disclosed, the statement came from an unauthorised person or the alleged loss exceeds the period covered, its reach must be determined separately.

The private foundation is the claimant under section 29 PSG. This differs from a personal disadvantage suffered by a beneficiary, founder or board member. An internal dispute about discharge therefore does not itself answer whether the foundation has its own damages claim.

When preparing a claim, preserve original documents in chronological order: foundation declaration, resolution materials, board minutes, audit reports, contracts, payment evidence and communications about the discharge. This separates the information available then from later assessments.

Section 27(2) PSG permits the court to remove a member of a foundation body where the foundation declaration provides for it or an important reason otherwise exists. The statute identifies in particular a gross breach of duty, inability to perform the duties properly and certain insolvency or enforcement situations.

Discharge and removal therefore do not ask the same question. A discharge may be relevant to the assessment of a known event or the parties’ interests. It neither automatically ends removal proceedings nor replaces the review of the organ’s current ability to function.

The development over time and the knowledge of the people involved must be kept separate. In 6 Ob 14/24p, the Supreme Court focused on whether the person making the discharge knew or had to know the relevant circumstances at the date of the statement. A general reference to later discoveries is not enough.

If removal is to be prevented or challenged, the discharge resolution must be considered alongside the current composition, alleged breach, foundation declaration and functioning of the foundation. Discharge alone does not provide a reliable prediction of the outcome.