WHAT IS THE MEMBERS’ VOLUNTARYLIQUIDATION PROCESS?

Once the company has proven to besolvent and the directors, andshareholders, have agreed to an MVL,an insolvency practitioner (IP) isappointed as liquidator to handle theMVL process. A series of steps thatmust be adhered to are taken by theIP. The following are the series of stepsrequires for the Members’ VoluntaryLiquidation process.

INTRODUCTION

STEP 1 –

DECLARATION OF SOLVENCY

The IP and directors prepare the final companyfinancial statement and Declaration ofSolvency. This must be done before the MVLcan go ahead. It declares that the company isable to repay all its debts, as well as contingentliabilities, within 12 months of the Declaration’sdate. All creditors are informed of theintention to close the company. Sometimes,unexpected claims arise at this point. This maydetermine whether the company is solvent ornot.Depending on the size of the company all orsome of the directors sign the Declarationwhich is then filed with Companies House bythe IP.

STEP 2 – THE SHAREHOLDERS’ MEETING

The directors will either convene a shareholders’meeting or send a written resolution to theshareholders’ informing them of the intendedcompany closure and their reasons.At least 75% of the shareholders’ must agree tothe MVL within 5 weeks from the Declaration ofSolvency being filed with Companies House. Inaddition, the resolution is advertised in theLondon Gazette within 14 days. The LondonGazette is the UK’s official public record andnotifies of the intention to close the company.Once agreed by the shareholders’, the IP alsoofficially notifies creditors of the intendedcompany closure within 28 days. They canproceed with the Members’ Voluntary Liquidationprocess.

STEP 3 – LIQUIDATING THE BUSINESS

The appointed liquidator officially starts theMembers’ Voluntary Liquidation process. Thecompany’s remaining assets are valued andsold at market price by the liquidator and anycreditors that remain are paid in full from thecompany’s cash reserves or realised assets.The remaining funds are distributed toshareholders of the company by theliquidator. All distributions are taxed ascapital instead of income in an MVL.Shareholders that qualify for Business AssetDisposal Relief can effectively reduce the rateof tax even further to 10% once the companyhas been closed.

Once the liquidation process has been completed and realised assets, as well as remainingfunds, have been distributed, the liquidator obtains final clearance from HMRC. The final documentation is filed with Companies House and a second notice is placed in theLondon Gazette to confirm the company is now closed. Within a 3 month period, it will beremoved from the Register at Companies House and the company will no longer exist.The timeline to complete a Members’ Voluntary Liquidation process varies depending on thesize of the company, the number of shareholders and the value of any assets

Step 4 –

Removing the company from Companies House’s Register

If you are considering closing a solvent company using a Members’ VoluntaryLiquidation process, contact Simple Liquidation for assistance. For moreinformation on how our professional insolvency practitioners may be able tohelp your business, contact us today!

0800 246 5895

www.simpleliquidation.co.ukmail@simpleliquidation.co.uk