The Charity Commission is examining Sentebale's decision to pursue defamation proceedings against Prince Harry, who co-founded the organisation nearly two decades ago.
Britain's charity regulator confirmed it has been in contact with the charity's trustees since learning of the planned legal action in February.
A Charity Commission spokesman told the Mirror: "We are aware of the charity's plans to take legal action and have been engaging with the trustees to understand how this action furthers their charity's purposes."
The watchdog has previously noted that litigation can pose considerable risks to a charity's beneficiaries, assets and public standing.
Charity watchdog holds crunch talks with Sentebale after legal move against Prince Harry
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Legal experts suggest Sentebale will need to demonstrate to regulators that pursuing court action represents the only viable option available.
Court documents reveal that Harry and Mark Dyer, a former trustee, are named as defendants in the libel claim.
The charity's board alleges the pair orchestrated an "adverse media campaign" that resulted in operational disruption and damage to Sentebale's reputation.
On Friday evening, a spokesman issued a statement on behalf of both men, firmly denying the accusations.
"They categorically reject these offensive and damaging claims," the statement read.
Dr Sophie Chandauka is the chairwoman of Sentebale | PAHarry established Sentebale alongside Prince Seeiso of Lesotho in 2006, creating the organisation to assist young people affected by HIV and AIDS across Lesotho and Botswana.
The charity's name translates as "forget-me-not" and was chosen to honour the late Princess Diana.
Sentebale has declined to comment further, citing the ongoing legal proceedings.
The organisation insists that no charitable funds are being directed towards the litigation, stating the costs are "met entirely by external funding."
Prince Harry set up Sentebale with Prince Seeiso in 2006 | GETTY
However, the source of this external financing remains undisclosed. A source close to Harry questioned the allocation of resources regardless of their origin.
"Whether they're using external or internal funds for the case, that money could still be used to support the charity's work," the source said.
Legal experts have warned that the stakes appear considerable for all involved.
A legal director and charity lawyer at Shoosmiths told The Times that initiating court proceedings represented a significant step, adding: "It looks high stakes ... It seems a sort of matter where there are going to be no winners."
Prince Harry pictured in Lesotho in 2006
| GETTYThe defamation lawsuit emerges from a bitter boardroom dispute that erupted last March, culminating in Harry and Prince Seeiso unexpectedly stepping down as patrons.
The conflict centred on tensions between the charity's chairwoman, Dr Sophie Chandauka, and a group of trustees who sought her removal.
In a joint statement issued in March 2025, Harry and Seeiso described their departure as "unthinkable," maintaining that trustees "acted in the best interest of the charity in asking the chair to step down."
Dr Chandauka subsequently accused the duke of involvement in concealing an investigation into alleged bullying, harassment and misogyny within the organisation.
The Charity Commission conducted its own inquiry, ultimately criticising all parties for allowing the dispute to unfold publicly and warning that the fallout risked undermining public confidence in charities more broadly.