What is Members Voluntary Liquidation (MVL)?

Step 1

Assessment of Company Solvency

Initial Assessment: The directors must first assess the company’s financial situation to ensure it is solvent. This means verifying that the company can pay off all its debts in full within 12 months.

Preparation of Financial Statements: Updated and accurate financial statements should be prepared, including a balance sheet, income statement, and cash flow statement.

Step 2

Declaration of Solvency

The directors must prepare a Declaration of Solvency. This document includes a statement of the company’s assets and liabilities and is a legal declaration that the company can meet its debts.

Each director needs to sign the Declaration of Solvency in the presence of a solicitor or a notary public, affirming their belief in the company’s solvency.

Step 3

Shareholders Resolution

The directors must call a General Meeting of the shareholders to propose the voluntary liquidation. At the meeting, shareholders need to pass a special resolution for liquidation.

This requires a 75% majority in favour of the resolution. The resolution must be advertised in The Gazette within 14 days to inform the public and potential creditors.

Step 4

Appointment of a Liquidator

The shareholders will appoint a licensed insolvency practitioner to act as the liquidator. The liquidator’s appointment is formalized at the General Meeting or shortly after.

Step 5

Liquidation Process by the Liquidator

The liquidator assumes control of the company, settles all outstanding debts, and collects any money owed to the company. The liquidator is responsible for liquidating (selling) the company’s assets in an orderly manner.

Step 6

Distribution of Remaining Assets

After paying off all debts, the liquidator calculates the amount available for distribution to shareholders. The remaining assets or the proceeds from the sale of assets are distributed to the shareholders according to their shareholding percentages.

Step 7

Finalising the Liquidation

The liquidator prepares final accounts that detail how the liquidation was conducted and how the assets were distributed. A final General Meeting is held to present the accounts to the shareholders and receive their approval.

After the final meeting, the liquidator sends a copy of the final accounts to the registrar. The company is then dissolved three months after the registrar receives these accounts.

Step 8

Post-Liquidation Requirements

The liquidator must notify the registrar of companies and The Gazette about the company’s dissolution. Additionally, liquidation records must be kept for a specific period as per legal requirements.