Some peculiarities of liquidation of charities and NGOs

As we know activity of charitable organizations and public associations are related to some legal specificity. The laws of Ukraine define special clauses which regulate procedures of establishment and liquidation legal entities. The ceasing of charitable organizations’ and public associations’ activity is related to the long procedure of liquidation when you had to get a lot of documents. That’s why a lot of heads just stop activity of charitable organizations and public associations and ignore a legal procedure. It can cause serious financial sanctions and problems from the state bodies.

The Civil Code of Ukraine, the Commercial Code of Ukraine, the Law of Ukraine “On registration of legal entities and individuals”, “On public association”, “On charity” regulate the procedure of charitable organizations’ and public associations’ liquidation. Nonetheless, there are some nuances in the liquidation of charitable organizations and public associations.

Article 15 of the Law of Ukraine “On charity and charitable organizations” defines that after registration charitable organizations get obligations and rights of legal entities. This registration is launched by officials according to the Law of Ukraine “On registration of legal entities and individuals”. So a charitable organization always functions as a legal entity and this predetermines features of its liquidation.

Public association can function without establishment a legal entity. This clause is defined by the Law of Ukraine “On public associations”. According to this the procedure of liquidation of public association also has some features.

Activity of charitable organization is ceased through the procedure of reorganization or liquidation according to the 18 Article of the Law of Ukraine “On charity and charitable organization”. Reorganization is launched in two ways: merger with another organization or division of organization. There are no other forms of reorganization. The decision about liquidation is adopted by an organization’s management which is authorized to do it according to a charter. Ceasing activity is launched according to the requirements of the Law of Ukraine “On registration of legal entities and individuals”.

According to the 25 Article of the Law of Ukraine “On public associations” activity can be ceased in these ways:

-          Self-dissolution;

-          Reorganization;

-          Forced self-dissolution.

Reorganization is hold through the merger to the same organizations which have the same charters. The reason for forced self-dissolution can be the decision of court about prohibition to do organization’s activity.

Legal practice shows that the most of public associations finish their activity through self-dissolution. There are some features for these organizations which are regulated by their status.

The public association, which is not a legal entity, ceases its activity when submit its notification to the state body via its authorized person. Nowadays the Ministry of Justice of Ukraine holds this registration. This notification is considered as a reason for fixation this matter in the Register of public association.

You can read more details about liquidation procedure in the second part of our article.