A Members Voluntary Liquidation (MVL) can be undertaken if the company is solvent (meaning it can pay its debts in full) and the directors wish to close the business. This can be due to a number of reasons including retirement, they don’t wish to run the business any more, OR THEY WISH TO GET MONEY IN A MORE TAX EFFICIENT WAY.
To place a company in MVL the directors are required to produce a statement providing details of the company’s assets and liabilities and that it can pay its debts in full within a period of 12 months. This statement known as a Declaration of Solvency must be ‘sworn’ IN FRONT OF A SOLICITOR by the directors of the company.
Within 5 weeks of signing the Declaration of Solvency the shareholders of the company must call a meeting to pass a resolution for winding up and to appoint a Licensed Insolvency Practitioner to act as liquidator.
Upon passing the resolution a copy of the Declaration of Solvency will be filed at Companies House and the resolution will be advertised in the London Gazette.
The liquidators duties are to ensure that any liabilities are paid in full and that any remaining assets be distributed to the shareholders of the company.