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What is an MVL?
A Members’ Voluntary Liquidation (MVL) is a process that is used to close down a solvent company. It involves the appointment of a liquidator, who is responsible for realising the company’s assets and distributing the proceeds to the shareholders.
An MVL is typically initiated by the directors of the company when they believe that the company is no longer needed and that it is in the best interests of the shareholders to wind it up.
An MVL is often used to close a company when it is likely the most tax efficient route for shareholders.
Process into an MVL
The process for putting a company into an MVL is as follows that SPK can guide you through:
01 Hold a Board meeting
The directors of the company must hold a meeting to consider the company’s financial position and decide whether it is appropriate to put the company into MVL. If the company still has outstanding debts to pay, they must also determine that the company will pay these debts in full within 12 months of the start of the liquidation.
02 Declaration of Insolvency
One of the directors must then prepare a Declaration of Solvency, confirming that the company will be able to pay its debts in full within 12 months and that it is in the best interests of the shareholders for the company to be wound up.
03 Call a General Meeting of Shareholders.
The directors must then call a general meeting of shareholders to vote on a resolution to put the company into liquidation. The resolution must be passed by a 75% majority of the shareholders voting (or if only two shareholders, then both must agree).
04 Appoint a Liquidator
If the resolution to put the company into liquidation is passed, the shareholders can appoint an SPK liquidator to oversee the process.
05 Realise Assets
The liquidator will then take control of the company’s assets and work to realise them in order to pay off the company’s debts.
05 Distribute Assets
After the debts of the company have been paid, all of the remaining assets will be distributed to the shareholders in accordance with the company’s articles of association.
It’s important to note that in a lot of MVL processes, all of the liabilities can be settled, and assets realised ahead of the commencement of the liquidation. This way, the shareholders can receive their distribution within only a few days of the liquidator’s appointment.