OUR INSOLVENCY AND RESTRUCTURING SERVICES FOR COMPANIES
MEMBERS VOLUNTARY LIQUIDATION ("MVL")
A SOLVENT LIQUIDATION THAT IS A TAX EFFICIENT WAY TO DISTRIBUTE ASSETS TO SHAREHOLDERS ON CESSATION
Used for solvent businesses, when a company can pay all its debts within a 12 month period or less. Assets are realised or distributed in specie to shareholders and can provide tax savings for individual shareholders
THE PROCEDURE
The liquidation process is started by the directors who pass a board resolution for the Company to be wound up voluntarily and agree the date, time and venue of the meeting of shareholders.
Prior to the meeting, the directors must swear a statutory declaration of solvency. The declaration embodies a statement of assets and liabilities, and states that having made a full enquiry into the company’s affairs, the directors are of the opinion that the company is capable of paying all of its debts, including statutory interest, within a specified period not exceeding 12 months from the date of the commencement of the liquidation.
Meeting of shareholders
The meeting considers a special resolution that the Company be wound up.
A company goes into MVL if its members pass this special resolution for its winding up, with a majority of at least 75% of those present and voting in person or by proxy (section 84, IA 1986 and section 283, Companies Act 2006). The members also nominate an insolvency practitioner to act as liquidator. This requires an ordinary resolution passed by a simple majority of more than 50% of those present and voting. The liquidation is deemed to commence from the passing of the resolution (section 86, IA 1986).
As an alternative to a Members Meeting, written resolutions may be passed instead.
The Liquidation
The resolution to wind up the company is advertised in the Gazette within 14 days and filed with the Registrar of Companies within 15 days. It is normal practice to advertise for creditor claims, although these may well be settled prior to the liquidation commencing.
The Liquidator then takes steps to deal with any outstanding matters, including asset realisation, payment of creditor claims and resolution of tax affairs. There is no requirement for the Liquidator to conduct an investigation into the company’s affairs or the conduct of the directors, as is the case in an insolvent liquidation, as the directors have sworn a statutory declaration of solvency.
Once all claims are quantified and settled, if not already done so by the Company, the Liquidator will distribute the surplus assets (either in cash or in specie) to the shareholders.
Once the company’s affairs are finalised and no assets remain, the Liquidator will prepare a final account of the winding up, which will be filed with the Registrar of Companies, and after three months, the company will be struck from the register and dissolved.
The liquidation process is started by the directors who pass a board resolution for the Company to be wound up voluntarily and agree the date, time and venue of the meeting of shareholders.
Prior to the meeting, the directors must swear a statutory declaration of solvency. The declaration embodies a statement of assets and liabilities, and states that having made a full enquiry into the company’s affairs, the directors are of the opinion that the company is capable of paying all of its debts, including statutory interest, within a specified period not exceeding 12 months from the date of the commencement of the liquidation.
Meeting of shareholders
The meeting considers a special resolution that the Company be wound up.
A company goes into MVL if its members pass this special resolution for its winding up, with a majority of at least 75% of those present and voting in person or by proxy (section 84, IA 1986 and section 283, Companies Act 2006). The members also nominate an insolvency practitioner to act as liquidator. This requires an ordinary resolution passed by a simple majority of more than 50% of those present and voting. The liquidation is deemed to commence from the passing of the resolution (section 86, IA 1986).
As an alternative to a Members Meeting, written resolutions may be passed instead.
The Liquidation
The resolution to wind up the company is advertised in the Gazette within 14 days and filed with the Registrar of Companies within 15 days. It is normal practice to advertise for creditor claims, although these may well be settled prior to the liquidation commencing.
The Liquidator then takes steps to deal with any outstanding matters, including asset realisation, payment of creditor claims and resolution of tax affairs. There is no requirement for the Liquidator to conduct an investigation into the company’s affairs or the conduct of the directors, as is the case in an insolvent liquidation, as the directors have sworn a statutory declaration of solvency.
Once all claims are quantified and settled, if not already done so by the Company, the Liquidator will distribute the surplus assets (either in cash or in specie) to the shareholders.
Once the company’s affairs are finalised and no assets remain, the Liquidator will prepare a final account of the winding up, which will be filed with the Registrar of Companies, and after three months, the company will be struck from the register and dissolved.