Commentary on provisions of Act Section 7: Power to direct winding up
Section 7 inserts into the Charities Act 2011 a new section 84B which enables the Commission to direct a charity to wind up in certain circumstances.
	The Commission’s usual practice is to attempt to restore a charity to health following a statutory inquiry. However there are rare cases where it would be more appropriate for any remaining assets to be transferred to another charity with the same or similar purposes (something the Commission can already do under existing powers) and the shell of the charity to then be wound up (which this new power would enable). The Commission itself cannot wind up the charity, as to do so would be acting in the charity’s administration, so this new power enables the Commission to direct the trustees (or if necessary other persons in the charity such as any remaining employees or members) to take the necessary steps to wind it up (new section 84B(2)).
	The power would only be available in the context of a statutory inquiry, the Commission must be satisfied that the charity does not operate or that its purposes could be more effectively promoted if it were to cease to operate, and that the exercise of this power is expedient in the public interest (new section 84B(1).
	New section 84B(3) enables an order to give the recipient(s) of the order powers that they may not have, in particular powers that normally only the members of the charity would be able to exercise in the context of winding up the charity. New section 84B(3) also prevents the order from requiring action to be taken that is prohibited by statute. Similar provision already exists in sections 84(3) (Power to direct specified action to be taken) and 85(3) (Power to direct application of charity property) of the Charities Act 2011. The Commission is required to give public notice of its intention to make a winding up order (new section 84B(4)) and must consider any representations made (new section 84B(5)) before making the order. The Commission must give at least 60 days public notice of intention to make a winding up order unless there is a particular need for less notice to be given (new section 84B(6). Action taken under such an order is treated as properly done (new section 84B(7)) but existing contractual rights are protected (new section 84A(8)).
	Section 7(5) provides for a right of appeal to the Tribunal, both for the recipient(s) of a winding-up order and where the order displaces members’ rights or powers, the members of the charity.