Members' voluntary liquidation procedure
The MVL begins on the date of passing of the resolution to wind up the company. To be a members' voluntary liquidation (MVL) the directors must make a statutory declaration of solvency (with prescribed contents) to confirm that the company can pay its debts in full together with interest at the official rate (currently 8%) within a period not exceeding 12 months.
However, the statutory declaration of solvency will have no effect if it:
- was not made within the 5 weeks immediately before the directors' resolution for winding-up of the company is passed (this can be at any time in those 5 weeks, even on the day of the resolution, so long as it is made before the resolution is passed); and
- doesn't include a statement (with prescribed contents) of the company's assets and liabilities as at the latest date possible before the making of the statutory declaration of solvency.
The declaration of solvency must be delivered to the registrar of companies within 15 days after the date of the resolution. The company must within 14 days of passing the resolution publish a noticed of it in the Gazette.
If the resolution for winding-up is passed, the members will at the same time appoint one or more insolvency practitioner to act as the liquidator(s). All the powers of the directors will cease on the appointment of the liquidator, except in as much as the company in general meeting or the liquidator approves retention of some.
The chairman of the meeting has to certify the liquidator's appointment and deliver that certificate as soon as is practicable to the liquidator for inclusion as part of the records of the winding-up. The contents of the certificate are prescribed and among other facts, must state that the liquidator has supplied them with a statement confirming that they are qualified to act as an insolvency practitioner in relation to the company and that they consent to do so. The certificate must be authenticated and dated. The chairman must also, within 28 days of the liquidator's appointment notify the creditors of it.
The liquidators must within 14 days of their appointment publish in the Gazette and deliver to the registrar of companies for registration, a notice of their appointment in the prescribed form.
The liquidator will proceed to wind up the company's business and distribute its assets to the company's creditors and any surplus will be paid to the shareholders. The liquidator must provide the members of the company with written progress reports in which they set out the progress made with the winding up of the company and any issues that have arisen.
The MVL ends with the liquidator drawing up a final account of the winding up, setting out how it was conducted and how the company's property has been disposed of. This final account must, within 14 days of being drawn up, first be sent to the members of the company and then to the registrar of companies. Three months after the registrar received and registered the final account, the company will be deemed to be dissolved.