A Members' Voluntary Liquidation is amongst the many liquidation processes, which come under the Insolvency Act of 1968.
It is a procedure for liquidation of those companies, which are not insolvent.
Usually, liquidation is taken as a last step for those companies, which are insolvent and can no longer pay their debts.
When such a situation is reached, the company liquidates, and its assets are sold off to pay the debts.
However, it is not necessary that the company be insolvent to be liquidated.
If the members of the company feel that they do not wish to continue the operations of the company in the future, they can opt for a VML in order to liquidate the company.
In addition, if the company is incurring losses, but it is still solvent, or if the members cannot agree upon the future of the company, a VML can be a good option.
Therefore, in this way, it is the opposite of a compulsory liquidation.
A MVL is only possible if the company has enough funds to pay off all its debts.
The company must be solvent, meaning that it must be in the position to pay off its debts in twelve months.
The liquidation process starts with a formal resolution to wind up the company.
This resolution is made at a company meeting where the financial position of the company is discussed.
At this board meeting, a resolution of the board is taken in which, it is decided whether it is viable to liquidate or not.
The decision to appoint a nominated liquidator is also taken.
The resolution will be passed only if seventy five percent of the members agree to it.
After this, within five weeks of the resolution, a formal Declaration of Solvency should be produced.
The Declaration of Solvency is a proof of the solvency position of the company, and contains details about the assets and liabilities of a company.
It is evident that the company has the ability to pay creditors together with statutory interest within a maximum of 12 months.
After the necessary legal procedures have been undertaken, the liquidator is then responsible for valuing the assets of the company, to sell them off, or distribute them amongst the shareholders, and members.
When the liquidator is appointed, the authority of the directors is ceased, although he liquidator will consult them in all the matters.
A MVA process lasts as long as it takes the company to complete all the mentioned legal proceedings.
A MVA is beneficial for the shareholders, as they can get back their investment that they made in the business.
Either the liquidator will distribute the assets of the business within the shareholders, or he will sell them off, and distribute the cash.
It is important to ascertain before hand that the company is, indeed, solvent, and can pay off its debt within a year.
If, within the liquidation process, it is discovered that the company is not financially stable, then the directors can face legal action, and they may be taken to court.
It is a procedure for liquidation of those companies, which are not insolvent.
Usually, liquidation is taken as a last step for those companies, which are insolvent and can no longer pay their debts.
When such a situation is reached, the company liquidates, and its assets are sold off to pay the debts.
However, it is not necessary that the company be insolvent to be liquidated.
If the members of the company feel that they do not wish to continue the operations of the company in the future, they can opt for a VML in order to liquidate the company.
In addition, if the company is incurring losses, but it is still solvent, or if the members cannot agree upon the future of the company, a VML can be a good option.
Therefore, in this way, it is the opposite of a compulsory liquidation.
A MVL is only possible if the company has enough funds to pay off all its debts.
The company must be solvent, meaning that it must be in the position to pay off its debts in twelve months.
The liquidation process starts with a formal resolution to wind up the company.
This resolution is made at a company meeting where the financial position of the company is discussed.
At this board meeting, a resolution of the board is taken in which, it is decided whether it is viable to liquidate or not.
The decision to appoint a nominated liquidator is also taken.
The resolution will be passed only if seventy five percent of the members agree to it.
After this, within five weeks of the resolution, a formal Declaration of Solvency should be produced.
The Declaration of Solvency is a proof of the solvency position of the company, and contains details about the assets and liabilities of a company.
It is evident that the company has the ability to pay creditors together with statutory interest within a maximum of 12 months.
After the necessary legal procedures have been undertaken, the liquidator is then responsible for valuing the assets of the company, to sell them off, or distribute them amongst the shareholders, and members.
When the liquidator is appointed, the authority of the directors is ceased, although he liquidator will consult them in all the matters.
A MVA process lasts as long as it takes the company to complete all the mentioned legal proceedings.
A MVA is beneficial for the shareholders, as they can get back their investment that they made in the business.
Either the liquidator will distribute the assets of the business within the shareholders, or he will sell them off, and distribute the cash.
It is important to ascertain before hand that the company is, indeed, solvent, and can pay off its debt within a year.
If, within the liquidation process, it is discovered that the company is not financially stable, then the directors can face legal action, and they may be taken to court.