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Why end an organisation?
Ending an organisation can be required for many reasons, but usually an organisation ends because it:
- no longer wants to pursue its objectives
- no longer has enough members, funding or committed people, or
- has decided to end
More information
Ending an organisation is different to merging or amalgamating with another association (where two or more organisations combine), although sometimes it may be necessary to bring an organisation to an end after a merger or amalgamation is complete. For more information on amalgamation, go to our resources on amalgamation.
There are different steps for ending an organisation, depending on the legal structure of your organisation and the reason for ending the organisation.
If you decide to end your organisation, you must follow the appropriate process.
The process of ending an organisation
The steps for ending an organisation depend on:
- the legal structure of your organisation (ie. a company limited by guarantee or an incorporated association)
- why the organisation is coming to an end
- whether the ending of the organisation is voluntary or compulsory, and
- the organisation’s size and location
Tip
To find out what your organisation’s legal structure is, visit the Australian Business Register website to search for your organisation by ABN, ACN, or name.
If your organisation is a company limited by guarantee (CLG), you will need to wind up the CLG in accordance with the process in the Corporations Act 2001 (Cth) and in accordance with the CLG’s constitution.
If your organisation is an incorporated association, you will need to wind up the incorporated association in accordance with the laws that govern incorporated associations. Which law applies depends on which state or territory your organisation is incorporated in.
See our webpages on ending a CLG and ending an incorporated association for information.
Distributing surplus assets when an organisation ends
When an organisation ends, its surplus assets must be distributed. See our webpages on ending a CLG and ending an incorporated association for information about distributing surplus assets when an organisation ends.
Can you wind up parts of your organisation?
Winding up is generally only necessary if you want to bring the entire organisation to an end.
If you only want to bring parts of your organisation to an end, how that is done will depend on your organisation’s constitution or rules.
For example, if the part you want to end is only a division or business unit, a service or project of the organisation, there are no special rules as to how you bring the part to an end (subject to any rules that may apply in your constitution). You may need to re-deploy staff or make them redundant, sell assets, terminate leases etc. While each of these steps will need to be carefully considered and each will involve legal issues, they don’t affect the existence of the organisation.
If your organisation is a registered charity, what do you need to do?
If your organisation is a charity registered with the Australian Charities and Not-for-profits Commission (ACNC), also complete and submit an ACNC form to apply to revoke charity registration through the Charity Portal. Before applying to cancel your association’s registration as a charity, you must submit your most recent annual information statement, or explain why it is not necessary when you apply to cancel your registration.
There are particular requirements for ending an ACNC-registered charity. These will usually be the same in relation to ending your organisation and include that the charity must distribute any surplus assets to a charity with similar charitable objects (the specific requirements will often be set out in the charity’s constitution). If your charity is closing, it should seek legal advice on the distribution of surplus assets, and the process as a whole.
Note
If your charity is closing and has surplus assets to distribute, instead of a one-off donation to another similar charity, another option may be to establish a sub-fund at a local community foundation. This can continue the legacy of the closing charity by setting up enduring funding streams for other charities. More information can be found on Australian Community Philanthropy’s website.
More information
For more information, see the ACNC’s webpage, ‘Wind up your charity’.
If your organisation has Deductible Gift Recipient status, does this make a difference to the process?
No, having deductible gift recipient (DGR) status does not change the process you must follow when winding up the organisation.
However, having DGR status will determine who you need to distribute any surplus assets to.
Note
All organisations that have been endorsed by the Australian Taxation Office (ATO) as having DGR status are required to have a clause in their constitution (or governing rules) dealing with winding up the organisation.
This winding up clause will require your organisation to distribute all surplus assets to another DGR fund, authority or institution that has a similar primary purpose to your organisation.
Therefore, if you have DGR status, you must check your organisation’s constitution or rules and make sure you are complying with this winding up clause and any other provisions in your constitution that deal with the transfer of surplus assets. For example, DGR endorsement will also require that your rules ensure profits are directed toward achieving your organisation’s purpose and will generally prohibit distributions of profits to members – both while operating and when winding up.
More information
For more information on ending an organisation with DGR status see the ATO webpage on ending your organisation.
How do people know your organisation has ended?
If your organisation is a CLG, you must notify ASIC who will place this on the public record.
If your organisation is an incorporated association, you must notify your state or territory regulator by lodging particular documents. The regulator will generally place those documents on a public record.
If a liquidator has been appointed to wind up the organisation, the organisation must include the words ‘in liquidation’ immediately after its name where it first appears in all public documents (such as letters, cheques, reports).
See our webpages on ending a CLG and ending an incorporated association for information.
The content on this webpage was last updated in February 2024 and is not legal advice. See full disclaimer and copyright notice.
