Winding up/dissolving a charity and removing a charity from the register
This page includes information concerning winding up or dissolving a charity, including charity mergers, and the removal of a charity from the register.
Winding up/dissolving a charity
Most charities will have a finite life. This may be due to a number of reasons, for example, changes in society mean that there is no longer a need for the purposes for which the charity was established or it is no longer practical for the charity to continue in operation, either at all or in its current form.
If consideration is being given to winding up or dissolving a charity, the first step is to look at its governing instrument to see what provision is made for this. If the governing instrument provides a process, then this must be followed.
Note: depending on the charity’s legal nature, the winding up process may be specified in legislation, for example if it is a body corporate established under specific legislation.
If there is no process specified, either in the governing instrument or applicable legislation, the first step will be to identify a mechanism by which the charity can dispose of its remaining funds and assets:
- If the charity’s governing instrument permits it to spend both its capital and income in achieving its objectives, then the charity is able to use its remaining funds and assets for this purpose.
- If the charity’s governing instrument permits it to spend its income, but not its capital (or endowment), in achieving its objectives, or if the charity does not have a governing instrument, it is likely that the charity will need approval either to spend its capital for that purpose, or to transfer it to another charity with the same, or similar objectives. Depending on the charity’s circumstances, the approval would be sought from the High Court, under the Charities Act 1962, or from the Attorney General, under the Charities Act 1986. Further information is available in the Guidance on making an application to the Attorney General under the Charities Act 1986 which is available on the Publications page.
Once the charity has exhausted, or transferred, its funds and assets, the charity should contact Charities Administration to discuss any further formalities that may be required for it to be treated as having been wound up.
Within one month of the winding up or dissolution having taken place, the charity trustees must notify the Attorney General that the charity has been wound up or dissolved by completing the notification form (and Annex F) and sending it to Charities Administration. The charity will then be removed from the register.
A charity (A) may be being wound up or dissolved because it has merged with another charity (C) which has been established for the same or similar objects.
Charity C may be completely unrelated to charity A, or charity C may have been established as a successor to charity A, for example where charity A is an unincorporated charity or trust and, due to the nature of its operations, the charity trustees consider that they would be best undertaken by a charitable company, and so charity C is incorporated.
Alternatively, the merger of two charities (A and B) results in the creation of a new charity (C).
Part 7 (sections 31 to 35) of the Charities Registration and Regulation Act 2019 provides for the creation of a register of charity mergers.
There is no obligation to inform the Attorney General of a charity merger, but it can be beneficial to do so.
The effect of the entry of a merger on the register is that any future gift or bequest to charity A (or B) is automatically payable to charity C, meaning that there is no need to keep charity A (or B) in existence, and on the register and subject to the continuing filing requirements, merely to receive future gifts or bequests and to pay them over to charity C.
A charity merger is reported by charity C, using the Merger Notification Form which is available on the Publications page. This must be done within one month of the date of the transfer of the assets to charity C.
Removing a charity from the register
Section 15 provides that the Attorney General must remove a charity from the register in the following circumstances:
(a) The charity has ceased to exist;
(b) After reasonable inquiry, the Attorney General considers the charity to have ceased to operate;
(c) The Attorney General considers that the charity no longer has a substantial and genuine connection with the Isle of Man;
(d) The charity is exempt from registration; and
(e) The Attorney General no longer considers that the institution concerned is a charity.
The Attorney General will remove a charity from the register on the ground that it has ceased to exist on being notified by the charity trustees (using the notification form available on the Publications page) that it has been wound up or dissolved.
Otherwise, the Attorney General will decide whether there are grounds for removing a charity according to the information available to him. If any person considers that a charity currently on the register should be removed for any of the grounds (a) to (e), they should contact Charities Administration.
Publication of the removal of a charity from the register
The Attorney General is required to publicise the removal of a charity from the register. This is done by including the removal in the list of recent changes to the register (which appears on the page Index of charities registered in the Isle of Man). Also, the searchable index on that page includes charities which have been removed since 1 April 2020.
Work is underway for the searchable index to include entries for all charities which have been registered in the Isle of Man since the obligation to register first came into effect under the Public Charities Act 1922, including those removed from the register prior to 1 April 2020.
Contact details for Charities Administration
Attorney General’s Chambers
Isle of Man
Telephone:+44 1624 687318
Email: Send Email
Date of publication: January 2021