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What is the Members’ Voluntary Liquidation process?

Once the company has proven to be solvent and the directors, and shareholders, have agreed to an MVL, an insolvency practitioner (IP) is appointed as liquidator to handle the MVL process. A series of steps that must be adhered to are taken by the IP. The following are the series of steps requires for the Members Voluntary Liquidation process.

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What is the Members’ Voluntary Liquidation process?

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  1. WHAT IS THE MEMBERS’ VOLUNTARY LIQUIDATION PROCESS?

  2. INTRODUCTION Once the company has proven to be solvent and the shareholders, have agreed to an MVL, an insolvency practitioner appointed as liquidator to handle the MVL process. A series of steps that must be adhered to are taken by the IP. The following are the series of steps requires for the Members’ Voluntary Liquidation process. directors, and (IP) is

  3. The IP and directors prepare the final company financial statement Solvency. This must be done before the MVL can go ahead. It declares that the company is able to repay all its debts, as well as contingent liabilities, within 12 months of the Declaration’s date. All creditors are informed of the intention to close the company. Sometimes, unexpected claims arise at this point. This may determine whether the company is solvent or not. Depending on the size of the company all or some of the directors sign the Declaration which is then filed with Companies House by the IP. and Declaration of STEP 1 – DECLARATION OF SOLVENCY

  4. The directors will either convene a shareholders’ meeting or send a written resolution to the shareholders’ informing them of the intended company closure and their reasons. At least 75% of the shareholders’ must agree to the MVL within 5 weeks from the Declaration of Solvency being filed with Companies House. In addition, the resolution is advertised in the London Gazette within 14 days. The London Gazette is the UK’s official public record and notifies of the intention to close the company. Once agreed by the shareholders’, the IP also officially notifies creditors of the intended company closure within 28 days. They can proceed with the Members’ Voluntary Liquidation process. STEP 2 – THE SHAREHOLDERS’ MEETING

  5. The appointed liquidator officially starts the Members’ Voluntary Liquidation process. The company’s remaining assets are valued and sold at market price by the liquidator and any creditors that remain are paid in full from the company’s cash reserves or realised assets. The remaining funds are distributed to shareholders of the liquidator. All distributions are taxed as capital instead of income in an MVL. Shareholders that qualify for Business Asset Disposal Relief can effectively reduce the rate of tax even further to 10% once the company has been closed. STEP 3 – LIQUIDATING THE BUSINESS company by the

  6. Step 4 – Removing the company from Companies House’s Register Once the liquidation process has been completed and realised assets, as well as remaining funds, 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 the London Gazette to confirm the company is now closed. Within a 3 month period, it will be removed 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 the size of the company, the number of shareholders and the value of any assets

  7. If you are considering closing a solvent company using a Members’ Voluntary Liquidation process, contact Simple Liquidation for assistance. For more information on how our professional insolvency practitioners may be able to help your business, contact us today! 0800 246 5895 mail@simpleliquidation.co.uk www.simpleliquidation.co.uk

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