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Members voluntary liquidation for solvent companies
Members’ voluntary liquidation (MVL) is a means by which shareholders in a solvent company can wind up its affairs, perhaps because it has few or no liabilities and is no longer commercially relevant. Another situation in which members voluntary liquidation may be desirable is if there is a shareholders’ dispute and all other options have been exhausted.
Entering into MVL should be relatively straightforward. Shareholders must meet to appoint a registered insolvency practitioner while directors must sign a Declaration of Solvency, in which they state their intention to pay any debts in full.
Insolvent companies should seek a creditor’s voluntary liquidation (CVL)
The role of the insolvency practitioner
Once appointed the insolvency practitioner acts as liquidator, ensuring that all debts are paid and that assets are distributed fairly among shareholders and members. Distribution of assets does not have to be made monetarily – instead, when this is agreed, it can be done “in specie”, meaning that, for example, cars, computers or furniture can be distributed amongst members rather than sold and then converted into cash.
Once assets have been distributed, shareholders do not have to pay PAYE or NI, instead they have to pay capital gains tax, while directors can claim Entrepreneurs’ Relief in conjunction with capital gains personal allowance of £11,100. These facts can bring many advantages.
Insolvency legal advice with Simply.Law
Simply.Law’s member solicitors include many who specialise in giving insolvency legal advice. To bring clarity and confidence to the process of members’ voluntary liquidation, talk with us today.
There are many ways to get in touch. Try our Match Service, browse our member profiles, speak with an advisor or consult a solicitor, free, for thirty minutes.
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