The Duke and Duchess of Sussex’s former Sussex Royal foundation has been cleared of breaching charity law, but should have done more to document its decision-making, the Charity Commission has found.

Harry and Meghan’s spokeswoman welcomed the outcome, saying the review underlined “both the legitimacy of the former charity and the baselessness of the claims against it”.

Republic, which campaigns for an elected head of state, reported the foundations of the Sussexes and the Duke and Duchess of Cambridge to the regulator in July last year.

The claims were made after the Sussex Royal charitable body, which later became known as MWX Foundation before being wound up, received a £145,000 start-up grant from William and Kate’s Royal Foundation.

A further sum of £151,855 was transferred from the Royal Foundation to MWX to deliver Harry’s Travalyst sustainable travel programme, and was later transferred by MWX to the Travalyst organisation.

But the Commission found that all transfers of funds were lawful.

It did, however, criticise the MWX Foundation for failing to adequately document its decisions on spending, which the Commission said was not in line with best practice and guidance.

It noted that the trustees took a decision to close the charity just 12 months after it was established, “doing so during difficult and unexpected circumstances”, and that almost half its funds were spent on legal and administrative costs.

Harry, who has faced a rift with his brother William, and Meghan split from the Cambridges’ Royal Foundation after just 16 months of collaboration, and set up Sussex Royal.

But they then stepped down as senior working royals, triggering the so-called Megxit crisis, and are now based in the US with the not-for-profit Archewell Foundation.

Helen Earner, director of regulatory services at the Charity Commission, said: “In this case we have found that the trustees complied with their duties under charity law, and the transfers of funds between different organisations were in keeping with the charities’ governing documents, with conflicts of interest being appropriately managed.”

But she warned: “The MWX Foundation should, though, have done more to document its decisions, especially regarding the charity’s expenditure on legal and administrative costs.

“We also note that a substantial proportion of funds went into setting up and then winding up a charity that was active for a relatively short period of time.

“Trustees cannot predict future events when establishing a new charity – circumstances can change after a charity has been set up.

“But all trustees, before setting up a charity, should think about the longer term, and consider carefully whether a new charity is the best way of achieving the intended aims.

“This helps ensure that set-up costs are offset by longer-term impact.”

A spokeswoman for Harry and Meghan said: “We are pleased that the Charity Commission has confirmed what we knew from the start: that MWX Foundation, formerly Sussex Royal, complied fully with UK charity law in its handling and transferring of funds and grants.

“Today’s update provides complete closure to this review and ultimately underscores both the legitimacy of the former charity and the baselessness of the claims against it.”

The Republic pressure group issued a lengthy apology to the charities and to Harry on its website.

It admitted that it “falsely claimed” that the transfer of funds was improper and likely to be unlawful.

It said: “We apologise unreservedly to the charities and personally to the Duke of Sussex for our actions and the public damage that has been caused as a result of widely publicised untrue claims.”

The Charity Commission found that the transfer of funds to MWX – which was formerly Sussex Royal: The Foundation – was in line with the governing document of the Royal Foundation and allowed under charity law.

It also found that the transfer of funds by MWX to not-for-profit sustainable travel organisation Travalyst was lawful.

The Commission further found that Travalyst could receive charitable funds for the promotion of sustainable travel only, which is a charitable activity in law, and there was no evidence to suggest that any conflicts of interest between MWX and Travalyst were managed inappropriately.

A separate case was opened into the Royal Foundation to investigate the decision to transfer funds to MWX Foundation, and it was found the trustees acted in accordance with the regulator’s guidance and there were no issues of concern.