Wind up or dissolve the charity

When it comes to winding up or dissolving a charity you can only do this with OSCR’s consent. This is to make sure that any remaining assets of the charity will be only be used for charitable purposes, as required by charity law, and that you have followed the rules in your governing document. 

If you are a SCIO you need to read the dissolution section in our SCIO guidance as well as our top tips to get it right.

If you’re thinking about winding up or dissolving your charity you should: 

1. assess what assets and liabilities your charity has at the time of making the application.
   
   
2. look at what your governing document says you need to do to wind up or dissolve. Does your governing document give you the power to take this action? Does the law governing your charity’s legal form allow you to take this action? 
   
   
3. decide what should be done with the charity’s assets remaining at the time of dissolution. Does your governing document say how any remaining charitable assets should be distributed?
   
   
4. ask for consent to wind up or dissolve your charity before distributing the remaining assets and before taking action to wind up or dissolve.

1.     Assess your assets and liabilities

Assets means everything a charity owns; property, money, equipment, including heritable property (such as land and buildings and rights attached to it). For example, cash in the bank account, office equipment, shares or investments.

Liabilities are generally anything a charity owes. For example, bank loans, hire purchase or leases, other debts. 

2.     Governing document requirements

In most cases a charity’s governing document will say what needs to happen when the charity winds up or dissolves, including how any remaining assets must be distributed. 

Often these requirements are set out in a ‘dissolution clause’, the section in your governing document that says how the charity should be wound up or dissolved.  

One of the requirements of being a charity in Scotland is that your governing document does not allow any of the charity’s assets to be used for a purpose that is not a charitable purpose under the 2005 Act. This applies during the lifetime of the charity and when the charity is wound up or dissolved.

Many governing documents will say you must distribute any remaining assets to or for one of the following: 

• a charity
• charities
• a charitable body
• charitable purposes
• purposes or objects the same as or objects similar to your charity. 

Similar purposes means purposes that are entirely charitable, that are similar but may not be exactly the same as your charity’s purpose(s).  

A charity, charities or charitable body means an organisation(s) in the Scottish Charity Register. Charitable purposes means the charitable purposes as set out in the 2005 Act. 

If you have an older governing document (created before 2005) then the meaning of ‘charity’, ‘charities’ or ‘charitable’ is not limited to the 2005 Act definition and includes organisations recognised before 2005 by HMRC and/or the Charity Commission for England and Wales, which could be a problem. 

We will check your application to make sure that it complies with the requirements of your governing document and charity law. 

 

3.     Decide what to do with remaining assets

Once you have established what your governing document requires you to do, the charity needs to decide which organisation(s) any remaining assets should go to.

If you plan on giving assets to an organisation that is not a charity you will need to make sure that:

• It is allowed by your governing document - if your governing document says you must give assets to another charity, then this is what you have to do.
  
  
• the recipient organisation has agreed it will only use the assets for charitable purposes and in the way that your governing document allows. We may ask for evidence of this, for example, a written agreement from the recipient organisation that it will only use the assets for charitable purposes.
  
  

4.  Apply to OSCR for consent to wind up or dissolve

Fill out the correct application form:

APPLICATION FORM: Wind up your charity  SCIO APPLICATION FORMS:  Dissolve a solvent SCIO  Dissolve an insolvent SCIO Applying to dissolve a solvent SCIO – top tips to get it right

 

Any forms sent to us outside of our office opening hours by email will be treated as being received when the office is next open.

Wind up/dissolution FAQs