Legal advice for charities closing down

13 Mar 2019 / regulation Print

Legal advice for charities closing down or merging

A charity that is winding up must inform the Charities Regulator before starting the process, according to a guidance document issued by the regulator. The charity must then provide the Charities Regulator with any information requested by it.

Where a charity holds a CHY number, it will also need to ensure that it complies with the Revenue Commissioners’ requirements in relation to winding up.

 

A charity that is a company must be wound up in accordance with the Companies Act 2014. It must also adhere to the requirements of its own constitution.

The Charities Regulator’s Guidance on Winding Up a Charity provides a summary of the most common methods of winding up a company, including by way of voluntary strike-off, involuntary strike-off, and liquidation. 

An unincorporated charity must also wind up in accordance with procedures laid out in its governing document.

The charity trustees should be aware that, once the charity is dissolved, they will hold any remaining assets on trust for the charitable purposes of the dissolved charity.

Charity sector experts Mason, Hayes & Curran (MH&C) points out that the procedure for winding up a charitable trust is broadly similar to winding up an unincorporated charity.

And trustees should remain aware of the risk of breach of trust if they still hold assets following the winding up of the trust.

The Charities Regulator also gives advice on converting a trust or unincorporated charity into a company. The charity’s governing document should ideally contain a power that allows an incorporation to occur.

Transfer of assets

But before the transfer of assets, it is essential that the company is registered as a new charity with the Charities Regulator, and has received a new registered charity number (RCN).

Where two charities decide to merge, the Charities Regulator has also laid out the steps to follow, and offers specific guidance where the merger involves two companies or one unincorporated body. 

 

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