Members' Voluntary Liquidation (MVL)

A Members Voluntary Liquidation (MVL) is appropriate when the company is solvent and can pay all of its debts. It is therefore sometimes also appropriate when shareholders wish to extract capital from a family company.

It is important to ensure that proper taxation advice is taken before using the MVL route to extract capital or assets.

The directors of the company, or a majority of them, must make a declaration that the company will be able to pay all of its debts plus any interest within 12 months of the winding up commencing. Having made this declaration the directors must, within 5 weeks, pass a resolution to wind up the company.

The members must pass a resolution to wind up the company and will then appoint a liquidator. Notice of the resolution to wind up must also be published in the London Gazette.

The liquidator will:

  • Take control of the company and its assets
  • Deal with creditor claims
  • Realise the company's assets and distribute the proceeds or the assets themselves
  • Pay all the company's debts plus interest
  • If the company is unable to pay its debts within the 12 month time frame then the liquidation will be converted into a creditors voluntary liquidation
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