Legal assumptions in the liquidation of NGOs – NGOs play an important role in society, carrying out many valuable initiatives and projects. Nevertheless, it may be necessary to liquidate such organizations for various reasons. In this article, we will discuss the main legal guidelines for the process of liquidating NGOs. You’ll learn what steps you need to take, what your obligations are to public authorities, and why compliance is critical in the process.
Key findings
- Liquidation of an NGO: The process of liquidating NGOs is subject to strict regulations, which vary from country to country and from one type of organization to another.
- First steps: The first step in liquidation is the adoption of a resolution by the body authorized to do so, followed by the notification of liquidation to the relevant government authorities.
- Property matters: when liquidating an NGO, it is important to carefully account for the assets and ensure that they are used for statutory purposes or transferred to another organization of a similar nature.
- Information obligations: NGOs must also be mindful of disclosure obligations, such as informing donors and partners of liquidation and publishing relevant announcements.
- Control of public authorities: During the liquidation of NGOs, public authorities can inspect and monitor the process, so compliance is critical.
Table of contents
- – Introduction
- – Liquidation of NGOs
- 2.1. First steps
- 2.2. Settlement of assets
- 2.3. Information obligations
- 2.4. Control of public authorities
- – Example of the procedure for liquidation of an NGO
- – Worth knowing: Frequently asked questions
1. introduction
Non-governmental organizations, also known as NGOs (Non-Governmental Organizations), play an important role in society. They often run projects in the fields of social welfare, education, environmental protection or culture. Nevertheless, an NGO may face liquidation for various reasons. This may be due to a lack of funding, changes in statutory objectives or other circumstances.
The liquidation of a non-governmental organization is a process that is subject to certain legal regulations, and its proper execution is of great importance for the transparency and legality of operations. In the remainder of this article, we will discuss the main legal considerations related to the liquidation of NGOs and the steps that need to be taken during the process.
2. liquidation of NGOs
2.1. First steps
The first step in the process of liquidating an NGO is the adoption of a resolution by a body authorized to do so. In most cases, it is the organization’s general assembly of members or board of directors. The resolution should precisely specify the reasons for liquidation and appoint a liquidator – a person or committee responsible for carrying out the liquidation process.
Once the resolution is passed, the NGO is obliged to notify the relevant public administration bodies of its liquidation. Depending on the country and the type of organization, these can be different institutions, such as the tax office, the ministry in charge of social affairs or the registry office.
2.2. Settlement of assets
Another important step in the liquidation of an NGO is a thorough accounting of its assets. Depending on the applicable regulations and the organization’s charter, these assets may be donated for statutory purposes, liquidated or transferred to another organization of a similar nature.
The settlement of assets must be carried out with due diligence and transparency. The NGO is required to prepare a liquidation balance sheet and a plan for the distribution of assets. It is worth remembering that the illegal use of an organization’s assets for private purposes or those inconsistent with its statutory purpose can lead to legal consequences.
2.3. Information obligations
A liquidating NGO also has disclosure obligations to its donors, partners and other stakeholders. They should be informed about the liquidation and how to settle the assets. This is important for the organization’s transparency and accountability to its colleagues and supporters.
Depending on the country and the type of organization, information obligations may be governed by different regulations. This can include announcements in the media, information letters sent to donors, or information published on the organization’s website.
2.4. Control of public authorities
During the process of liquidation of an NGO, public authorities can carry out various forms of control and monitor the liquidation process. The aim of these measures is to ensure compliance with the law and prevent illegal practices such as unjustified transfers of assets.
These inspections may include financial audits, examination of records or checking the legality of decisions made by the organization’s bodies. The NGO is obliged to cooperate with public authorities and provide all information needed for the inspection.
3. example of the procedure for the liquidation of an NGO
In order to better understand the process of liquidating an NGO, it is useful to look at a sample procedure. The following is an overview of the steps that may be necessary in the liquidation process:
Step 1: Pass a resolution to liquidate
- The authorized body (e.g., the general assembly of members) passed a resolution to liquidate the NGO. The resolution specifies the reasons for liquidation and appoints a liquidator.
Step 2: Notification of public administration authorities
- The NGO notified the relevant government agencies of its liquidation, providing the necessary documents and information.
Step 3: Prepare a liquidation balance sheet
- The liquidator prepared a liquidation balance sheet, taking into account all assets and debts of the NGO.
Step 4: Plan for division of assets
- Based on the liquidation balance sheet, the liquidator prepared a plan for the distribution of assets, determining what would happen to the organization’s various assets.
Step 5: Settlement of assets
- The settlement of assets in accordance with the approved plan has begun. The organization’s assets can be donated for statutory purposes, transferred to another NGO or liquidated.
Step 6: Inform donors and partners
- The NGO informed donors, partners and other interested parties about its liquidation, and how to settle the assets.
Step 7: Control of public authorities
- During the process of liquidating the NGO, the public authorities conducted inspections and monitored the progress of the liquidation work.
Step 8: Complete the liquidation
- Upon completion of the liquidation of the NGO, the liquidator prepared a final report, which was forwarded to the relevant public administration authorities.
Frequently asked questions
Can an NGO liquidate itself?
Yes, an NGO can liquidate itself, provided that a resolution to liquidate is passed by an authorized body, such as a general meeting of members. However, the liquidation of an NGO is a complicated process and requires compliance with legal regulations.
What happens to the assets of an NGO after it is liquidated?
The assets of a non-governmental organization after its liquidation may be donated for statutory purposes, transferred to another non-governmental organization of a similar nature, or liquidated. The decision in this regard depends on the asset distribution plan that must be prepared by the liquidator.
What are the legal consequences for not complying with the regulations when winding up an NGO?
Non-compliant legal actions during the liquidation of an NGO can result in various legal consequences, such as financial penalties, civil or criminal liability. Therefore, compliance is extremely important in this process.
Is the liquidation of an NGO tantamount to its disappearance?
The liquidation of an NGO means the formal end of its activities, but this does not necessarily mean the disappearance of all traces of it. The NGO’s history and activities can be documented, and the assets can be donated to its charter or to another NGO that continues similar initiatives.