So, you’re considering winding up your company through a process called Members Voluntary Liquidation (MVL). Don’t fret, we’ve got you covered. In this guide, we’ll walk you through the ins and outs of Members’ voluntary liquidation process in the UK, helping you understand the process and what it means for you and your business.
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What is Members Voluntary Liquidation (MVL)?
Alright, let’s start with the basics. Members Voluntary Liquidation, often abbreviated as MVL, is a formal procedure used by solvent companies to wind up their affairs and distribute assets to shareholders. In simpler terms, it’s like gracefully closing shop when your business is still in good shape.
When Should You Consider MVL?
So, when is the right time to hit the MVL button? Well, typically, MVL is suitable for companies that have fulfilled their purpose or for directors looking to retire and extract the company’s assets in a tax-efficient manner. If your business is solvent, meaning it can pay its debts in full within 12 months, MVL might be the way to go.
The MVL Process: Step by Step
Alright, let’s break down the MVL process into bite-sized chunks:
Directors’ Declaration of Solvency: Before diving into MVL, directors need to sign a declaration stating that they’ve conducted a thorough review of the company’s finances and believe it can settle all its debts, including interest, within a year of starting the liquidation process.
Appointment of Liquidator: Once the declaration is signed, a shareholders’ meeting is called to appoint a liquidator. The liquidator’s role is to oversee the winding-up process, realize assets, settle liabilities, and distribute surplus funds to shareholders.
Notifying Creditors and Gazette Publication: After the liquidator’s appointment, notice of the resolution to wind up the company is published in the London Gazette. Creditors are also notified, giving them the opportunity to submit any outstanding claims.
Realization of Assets and Settlement of Liabilities: The liquidator swings into action, selling off the company’s assets and settling any outstanding debts. This could include paying off creditors, employees, and any other liabilities.
Distribution of Surplus Funds: Once all debts and liabilities are settled, the remaining funds (if any) are distributed among the shareholders in proportion to their shareholdings.
Final Meeting and Dissolution: The final step involves convening a general meeting to lay out the accounts of the liquidation and explain how the process was conducted. Once approved, the company is officially dissolved, and its existence comes to an end.
Why Choose MVL Over Other Options?
Now, you might be wondering, why bother with MVL when there are other options on the table? Well, here are a few reasons why MVL might be the best fit for you:
Tax Efficiency: MVL can be a tax-efficient way to extract profits from your company, especially if you’re eligible for Entrepreneur’s Relief, which allows you to pay Capital Gains Tax at a lower rate.
Controlled Closure: Unlike other insolvency procedures that might be forced upon you, MVL puts you in the driver’s seat, allowing you to wind up your company on your own terms.
Creditor Confidence: By opting for MVL, you’re sending a clear signal to creditors that you’re winding up your affairs in an orderly manner, which could help maintain your business reputation.
Seeking Professional Advice
While MVL might sound like a walk in the park, it’s crucial to seek professional advice before taking the plunge. A qualified insolvency practitioner can guide you through the process, ensuring everything is done by the book and in compliance with legal requirements.
Conclusion
In conclusion, Members Voluntary Liquidation can be an effective way to wind up your company when it’s still in good financial health. By following the prescribed process and seeking professional advice, you can close the doors on your business with confidence, knowing that everything has been handled properly.
How we can help
We have a proven track record of helping clients deal with the process involved with company liquidation. We will guide you diligently and ensure all checks are carried out swiftly and efficiently and we firmly believe that with the right solicitors by your side, the entire process will seem more manageable and far less daunting. You can read more about the range of corporate services we offer by clicking here: https://blackstonesolicitorsltd.co.uk/corporate-legal-services/
How to Contact Our Corporate Solicitors
It is important for you to be well informed about the issues and possible implications of liquidating a company. However, expert legal support is crucial in terms of ensuring a positive outcome to your case.
To speak to our Corporate solicitors today, simply call us on 0345 901 0445, or click here to make a free enquiry. We are well known across the country and can assist wherever you are based. We also have offices based in Cheshire and London.
Disclaimer: This article provides general information only and does not constitute legal advice on any individual circumstances.
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