Members’ Voluntary Liquidation (MVL) Advice and Process

A Members’ Voluntary Liquidation is the process through which the shareholders can close a solvent limited company.

If you are the director of a solvent company and have decided that it needs to be closed for whatever reason, you may be able to consider a Members’ Voluntary Liquidation.

What do I need to do before entering into a Members’ Voluntary Liquidation?

The first thing that you will need to do is ensure that you have up to date financial information for the company as you will use this to prepare the Declaration of Solvency discussed above. It’s really important that this information is accurate and reflects the true state of the company’s affairs as to submit a false Declaration of Solvency is a very serious offence.

You should also spend significant time thinking about whether this is the right option for your company. If your company is indeed solvent, do you want to wind it up or could you continue to trade? If you are winding up the company because you’re having problems paying the bills, it’s likely that the company is insolvent and therefore a Creditors’ Voluntary Liquidation will be the appropriate form of liquidation to use.

If the company assets are valued more than a minimum of £25,000 net (after all creditors have been paid), then you must use an insolvency practitioner as liquidator.

The MVL process

Below we have covered the Members’ Voluntary Liquidation process in five steps to show how the procedure progresses in the following order:

Directors Board Meeting

The directors of the company will hold a board meeting and resolve to appoint a liquidator for the liquidation of the company. They will also agree how to convene the necessary shareholders meeting for step 3.

The Declaration of Solvency

The directors have to write and sign a Declaration of Solvency. The declaration states that the company is solvent and needs to be signed by a certain number of directors (the number varies by the size of the company). The declaration needs to follow set requirements and must also be filed at Companies House.

The Shareholders’ Meeting

Depending on the company’s Articles of Association, the Directors will either need to convene a meeting of the shareholders or send out a written resolution to the shareholders. In both cases, the shareholders need to resolve to pass the vote for the liquidation of the company by a 75% majority. This resolution needs to be passed within a five week period of the filing of the declaration of solvency being filed at Companies House. The resolution must also be advertised in the London Gazette.

Once the shareholders pass the resolution, the liquidation comes into immediate effect.

Liquidating the Company

The liquidator will commence the process of liquidating the company. Put simply; this will involve realising all of the company’s assets, paying off its creditors and distributing the remaining proceeds between the shareholders.

The Final Meeting

Once the liquidation process has been completed, the liquidator will need to convene a final meeting of the shareholders. They also need to send a notice of the liquidation to the London Gazette.

How long does a Members’ Voluntary Liquidation take?

Members’ Voluntary Liquidations must follow the set process outlined above. In addition to this, the actual liquidation time will vary depending on the complexity of the company’s financial situation. A rough estimate would be 5-6 months, but it is impossible to provide this advice without more information about your company.


Unfortunately, it’s very hard to estimate the costs of a members’ voluntary liquidation as they will vary significantly depending on the size and the complexity of the company itself. To give you an idea, you should estimate for £650.00 upwards. Bear in mind however by selecting the Members Voluntary Route you get the benefit of Entrepreneurial relief. Essentially this means you will pay 10% tax on the gains, so the greater the assets, the more cost effective the Members Voluntary Liquidation becomes.

Scenarios where an MVL may be used:

  • Your company has plenty of assets, such as property, vehicles, stock and cash in the bank, yet the company has no future use or purpose.
  • The company’s shareholders and directors would like to retire and transfer the firm’s assets and cash over to their personal side and close the company down.
  • You may not wish to have anything to do with the company going forward and may want to realise any assets and cash that are within the company.
  • You may wish to start a new venture with a new company and would like to get what you can out of your existing company, beforehand.

Possible reasons for closing a solvent company

  • The company may not be needed any longer
  • You may want to retire
  • You simply have had enough don’t want to run the business anymore
  • Members Voluntary Liquidation Process

Get Advice

To find out more about how the members’ voluntary liquidation process (MVL) can enable you to liquidate your limited company, call us on 08000 746 757.

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