Members Voluntary Liquidation (otherwise known as MVL)

This can apply to any limited company.

  • The principal characteristic of an MVL is that the company must be solvent. That is the realisable value of its assets exceeds the value of its liabilities including costs contingent on liquidation such as redundancy or lease dilapidation costs etc. There must be a surplus from the foregoing after providing for post liquidation tax and anticipated costs of administering the MVL.

  • The costs of administering the MVL will be met from the realised assets and the creditors of the company will be expected to be paid in full – 100p in the £ - plus statutory interest which runs from the date of liquidation to the date of the dividend payment.

  • The surplus will then be paid to the shareholders as a capital distribution.

  • This route, for shareholders to obtain a capital distribution, has certain personal tax advantages for the shareholders as opposed to simply paying substantial dividends.

It is essential that shareholders who are considering an MVL take appropriate personal tax advice from their own advisors before proceeding with an MVL.

The process to obtain MVL status requires a combination of both Director and Shareholder input by way of Resolutions etc. and there is normally no Court involvement in the process.

A first , but extremely important, step in the process is the completion of a Statutory Declaration of Solvency which narrates :

  • the values of assets falling into the MVL

  • the liabilities to be paid

  • the anticipated costs

  • the estimated interest and

  • the expected surplus.

The Declaration requires to be made and signed before a Notary Public or other authorised official.

It is the Directors’ responsibility for the reasonableness of the foregoing document and if it contains any material false information the Directors can be faced with criminal proceedings. It is also the Directors who instigate the MVL process but it is the Shareholders who pass the relevant resolutions to wind up the Company voluntarily and appoint the liquidator who will administer the liquidation.

We can assist with the preparation and submission of the Statutory Declaration of Solvency and all Notices , Resolutions , Returns etc. to ensure compliance with pre winding up requirements. One of our insolvency practitioners can act as liquidator who would then administer the process of realising the assets , paying the creditors and remit any surplus to the shareholders all the while attending to the requirements of the legislation relative to a variety of administrative matters.

If you are a Director or Shareholder who wishes to consider an MVL please contact us at advice@hastingsinsolvency.com