What is a Members’ Voluntary Liquidation (MVL)?
A Members Voluntary Liquidation (MVL) is the process owners and shareholders of a business can use to close a company down when it has assets or funds to return to shareholders – i.e. all of the debts of the company can be paid in full. Due to the nature of this type of liquidation, it is uncomplicated compared with a Creditors’ Voluntary Liquidation as the company does not have creditors who would need to be informed of proceedings and may object to elements of the procedure (such of the choice of liquidator) and a court hearing is not necessary.
Members Voluntary Liquidation Procedure
To begin the Members Voluntary Liquidation, a shareholders’ meeting should be called. During the meeting, a resolution should be passed by 75% or more of voting shareholders to voluntarily wind up the business. Just prior to the meeting the majority of directors of the company will prepare and sign a “declaration of solvency”. This will show the assets and any liabilities of the company either at the date of liquidation or another date within the preceding 5 weeks.
An Insolvency Practitioner such as Kevin Lucas of Lucas Johnson then needs to be appointed to liquidate the company. The job of the liquidator is to organise the winding up of the company and deal with legal requirements and disputes, particularly with creditors. Other responsibilities of the liquidator are selling assets, paying the liquidation fees, organising a final VAT and corporation tax payment or reclaim and ensuring all tasks are completed within the allowed time frames.
Following the shareholders meeting, an advertisement must be placed in The London Gazette, publishing the fact that the resolution has been passed. The Gazette is not a general newspaper, but specific public record of certain UK company proceedings.
In the final step of a Members Voluntary Liquidation After, the company assets will be sold, the debts will be paid, a surplus will be returned to the shareholders in the most tax efficient way and the business has to be removed from the Company Register by the liquidator.