Members Voluntary Liquidation Procedure (MVL)
An Outline of the MVL Procedure
A Members’ Voluntary Liquidation (‘MVL’) must follow the procedure set out in insolvency
legislation. We will assist you with the preparation and administration of each stage, including
the drafting of requisite notices, minutes and other documents, where appropriate, but
ultimately the responsibility remains with the director(s) of the Company. The following main
steps must take place in each appointment:
Board meeting: A quorate meeting of the Board of Directors will have to approve the issue of
notices convening the members’ meeting required by statute to place the Company into MVL,
nominate someone to act as chairman at the meeting of Members and state which Director(s)
are to swear a Declaration of Solvency on behalf of the Company.
Notices: Notices have to be issued convening a meeting of Members to pass resolutions to
wind up the Company voluntarily, appoint a Liquidator, set the basis of the Liquidator’s
remuneration, and any other resolution necessary in the circumstances of the Company for the
administration of the liquidation, such as granting the Liquidator the power to distribute assets in
specie to the Members.
Declaration of Solvency: The Director(s) nominated by the meeting (which must be all of them if
there is only one or two Directors, or a majority if there are three or more Directors) will be
required to swear a Declaration of Solvency on behalf of the Company confirming that the
Company will be able to pay its debts in full, including interest, within no more than 12 months
of the commencement of the liquidation. We will assist you in preparing a Declaration of
Solvency from the information that you provide, but it remains your statement. In the event that
it transpires that the Company is in fact insolvent and it is placed into creditors’ voluntary
liquidation by the Liquidator, it is presumed that the Declaration of Solvency was not made on
reasonable grounds, which leaves the Director(s) who swore it liable to a fine and/or
Members’ meeting: A meeting will be convened at which Members will be required to pass
resolutions placing the Company into voluntary liquidation, appointing a Liquidator, approving
the basis of the Liquidator’s remuneration, and any other resolution necessary in the
circumstances of the Company for the administration of the liquidation, such as granting the
Liquidator the power to distribute assets in specie to the Members.
Post-appointment notices: After the meetings, the Liquidator is required to issue and advertise
in the London Gazette a variety of notices for the attention of the Registrar of Companies and
the creditors of the Company.
Realisation and distribution of assets: The Liquidator will realise and then distribute assets in
accordance with the statutory order of priority. Creditors, together with an amount for statutory
interest from the date of the commencement of the liquidation, or the date the debt fell due for
payment if a later date, rank in priority to Members. In order to enable us to make an early
distribution to the Members it is our standard practice to obtain indemnities from the Members in
MVLs in respect of any liability that may fall on the Liquidator as a result of making a
Tax affairs: The Liquidator will need to obtain clearance from HM Revenue & Customs about
the Company’s corporation tax affairs before the liquidation can be finalised and completed.
The Liquidator will not be able to obtain such clearance until final accounts have been prepared
for the Company to the date of the liquidation. If such accounts have not been prepared prior to
the liquidation then the Liquidator may complete the accounts and charge for doing so in
addition to the agreed remuneration for acting as Liquidator, or alternatively instruct the
Company’s accountants to prepare them. The Liquidator’s or accountants’ reasonable costs of
preparing the accounts and finalising the Company’s corporation tax liability will be payable as
an expense of the liquidation.
HM Revenue and Customs consider that they are entitled to statutory interest at 8% per annum
on any pre-liquidation taxes that are outstanding as at the date of the winding up resolution putting the Company in to liquidation, even if they do not yet fall due for payment, i.e. they are future debts. As a result, whenever possible, all pre-liquidation taxes should be paid in full prior
to the commencement of the liquidation. If the Company cannot submit and pay a return
immediately before the winding-up resolution, the directors should obtain their own tax advice
on estimating the amount likely to be due in respect of the final pre-liquidation return and paying
over an equivalent amount to HM Revenue and Customs before the return is finally calculated
and submitted. Cromwell & Co accepts no liability should HM Revenue and Customs seek
interest on the full return, despite any advance payment.