Before a charity is wound up there are several compliance activities that must occur with the Australian Charities and Not-for-Profits Commission (ACNC), including lodging the most recent Annual Information Statement. Once this is done, charities are required to submit the relevant form requesting that the Commissioner revoke registration. If the request is approved, it takes effect from the day the Commissioner makes the decision unless a specified date is otherwise set by the Commissioner.
The ACNC Commissioner’s Policy Statement, titled Choosing to Revoke contains relevant guidance, as does section 35 of the ACNC Act. In summary, the Commissioner has a discretion as to whether to grant the request after considering the following factors:
- reasons for the request (and the ACNC may contact a charity to discuss the reasons for a request);
- the objects of the ACNC Act and ACNC’s interest in particular maintaining the integrity of the ACNC register – for example where a charity is no longer involved in activities to allow it to maintain its charitable status or where the charity has already been wound up the request is likely to be agreed to;
- confirmation that any remaining assets of the charity will be distributed consistent with its charitable purpose;
- any contravention or non-compliance by the charity and any enforcement activities being undertaken either by the ACNC or another regulator;
- public trust and confidence in the not-for-profit sector; and
- welfare of community members that receive direct benefits from the charity (if any).
Once approval is granted, the charity should proceed with the normal winding up steps relevant for its legal entity type, whether this be voluntary deregistration or appointing an administrator or liquidator. Charities should also follow their governing documents in this process particularly around the distribution of assets.
Once the process is complete, charities should be mindful that:
- it can no longer conduct any activities;
- it cannot fundraise or accept donations; and
- is not eligible for charity tax concessions.
The entity will remain on the ACNC database, as well as the databases for other regulators.
For more information on winding-up a charity or organisation, please contact us here.