A Members' Voluntary Liquidation (MVL) is a structured, tax-efficient process for closing a solvent company, ensuring all liabilities are settled before distributing remaining assets to shareholders.
How Members Voluntary Liquidation Works
Board ResolutionDirectors hold a meeting to confirm the company is solvent and should be liquidated.
Declaration of Solvency A statutory declaration confirming that the company can meet its obligations within 12 months is signed by directors.
Shareholder Approval At least 75% of shareholders (by share value) must pass a special resolution to place the company into liquidation.
Appointment of an Insolvency PractitionerA licensed insolvency practitioner is appointed as the liquidator to oversee the process.
Asset Distribution The liquidator collects and distributes the company’s remaining assets to shareholders.
Creditor Notification Although creditors will be paid in full, they must be informed of the liquidation.
Benefits of MVL
Tax Efficiency Funds distributed via MVL may be subject to Capital Gains Tax (CGT) instead of Income Tax, often reducing the tax burden.
Cost-Effective for High-Value Distribution An MVL is often the best option when distributing significant retained earnings.
Legal Protection & Compliance Ensures all company liabilities are settled properly.
Why choose MVL?
A company may enter Members' Voluntary Liquidation when:
- It is solvent and can pay all its debts in full.
- The shareholders wish to extract remaining funds in a tax-efficient manner.
- The business has served its purpose and is no longer required.
- Directors are looking to retire or move on to new ventures.
CVL vs. Members' Voluntary Liquidation (MVL)
MVL Used for solvent companies with surplus assets.
CVLSuitable for insolvent companies that cannot pay their debts. Read about CVL