A Members’ Voluntary Liquidation (“MVL”) is an efficient way to wind up a solvent company and release value to members. It is most often used where the directors wish to retire, the company has realised its potential or the company is dormant. By properly winding up the Company, the danger of the company being involuntarily struck off the Register of Companies and any resulting liability for the Directors is removed. A summary of the process is as follows:
- An MVL is commenced in accordance with the Summary Approval Procedure. The Directors complete a declaration, which sets out the company’s assets and liabilities and confirms that it will be able to pay its debts within twelve months of the commencement of liquidation.
- The Shareholders then pass a special resolution in favour of winding up the company.
- The members appoint a liquidator to manage the liquidation.
- The liquidator will distribute the Company’s assets in accordance with the normal rules of priority.
- Any surplus capital will vest in the members personally and assets can be transferred to the members.
The procedure for a Members’ Voluntary Liquidation is prescribed in Part of 11 the Companies Act, 2014 and strict adherence to the statutory framework is required. The entire exercise can be completed in a day however, there is preliminary work in preparation and very strict CRO filing requirements thereafter.