Why wind up?
Winding up, or ceasing to operate as a Not For Profit can happen voluntarily or may be forced by circumstances. For example if your Not For Profit is a company and you are insolvent (e.g. unable to pay your bills), ASIC might initiate deregistration.
If you’re faced with the responsibility of winding up your Not For Profit, there are specific processes you need to follow:
- to voluntarily wind up an incorporated association, see the Cancel, wind up or amalgamate an incorporated association page on the CAV website
- you can voluntarily deregister a company if it meets a list of requirements outlined in the Corporations Act 2001. The ASIC website has more information about voluntary deregistration, or the circumstances in which ASIC can deregister a company. See the Closing Down your company page on the ASIC website
- to wind up a co-operative you need permission from Consumer Affairs Victoria (CAV). See the Wind up a co-operative page on the CAV website for the steps you need to follow
- to wind up an indigenous corporation, members will have to pass a special resolution and you’ll need to inform ORIC, using the proper form. See the Closing a corporation page on the ORIC website for more information.
Winding up and finances
If you need to wind up your Not For Profit for any reason, you’ll need to consider finances.
Finances may be the reason for winding up. If your organisation is unable to pay its bills by the due date, this is also known as being insolvent.
If you are winding up your organisation for other reasons, you are likely to have excess funds and these will need to be distributed.
Can we keep operating if we are insolvent?
You must not continue to operate while insolvent – it’s illegal.
ASIC has a whole section about insolvency on their website, including information about your responsibilities if you are a director of an insolvent company.
- see the Insolvency section on the ASIC website.
The Not-for-profit Law information hub has a fact sheet and other information to help you if you have questions about financial problems and insolvency.
- see the Governance page for the 'Financial problems or insolvency' fact sheet.
What happens to excess funds after we wind up?
Not For Profit organisations may not distribute funds to benefit individual members. Go to your rules or constitution in the first instance for information about your obligations.