A Members Voluntary Liquidation is a winding-up procedure for cases where there is sufficient money to pay everyone in full, which involves similar steps to an insolvent liquidation without the investigative aspects.
The Procedure:
A board meeting normally resolves that the company should be wound up and a shareholders’ meeting held to put forward the necessary resolutions. The directors need to make a statutory declaration of solvency confirming that the company can meet its liabilities in full together with interest within twelve months. This must be made no more than five weeks before the shareholders’ resolution to wind up the company. The shareholders’ meeting takes place to pass a special resolution to place the company into Liquidation and appoint a Liquidator. Fourteen days notice is required for the meeting unless 90 per cent by value of shareholders consent to short notice. A majority of 75 per cent is required for a special resolution.
The Liquidator’s duties are to realise any remaining assets, agree any outstanding creditors’ claims and pay a dividend to them and then distribute the balance to shareholders. In many cases, the only assets and liabilities are inter-company claims.
An MVL is essentially the same process as a CVL with some exceptions:
- The directors need to make a statutory declaration of solvency confirming that the company can meet its liabilities in full with interest within twelve months.
- There is no creditors’ meeting. As a result, the costs tend to be lower.
- The Liquidator is not required to report on the directors’ conduct.
- The Liquidator normally has no cause to scrutinise the events leading up to the liquidation.
There is a process to allow an MVL to be converted into a CVL if it transpires that creditors cannot be paid within twelve months. It is, however, a criminal offence to make a statutory declaration without reasonable grounds for believing it to be true.
To discuss Members Voluntary Liquidations contact us today for a Free consultation on 0800 955 3595.
