Solvent Liquidation
Members Voluntary Liquidation (“MVL”)
A Members’ Voluntary Liquidation (MVL) is a formal process used to wind up a solvent company, where all creditors can be paid in full together with statutory interest.
In an MVL, the shareholders appoint a licensed Insolvency Practitioner as liquidator. The liquidator’s role is to settle the company’s liabilities, realise any remaining assets and, once all obligations have been satisfied, distribute the remaining funds to shareholders in accordance with their shareholdings.
An MVL provides a structured and controlled method of closing a company, ensuring that all financial matters are
properly concluded.
In certain circumstances, distributions made to shareholders through an MVL may be treated as capital distributions, which can provide potential tax advantages depending on the shareholders’ individual tax positions.
An application to strike the company off the register may sometimes be considered as an alternative way of closing a solvent company. However, this route is subject to strict eligibility conditions, meaning that an MVL is often the most appropriate option where a company has significant assets or retained profits to distribute.