two people having a financial meeting

What is a Member’s Voluntary Liquidation (MVL)?

An MVL is the name given to a process whereby shareholders of a company voluntary liquidate the assets and close the company, striking it off as a legal entity.

If a company is solvent, with assets remaining inside it an MVL is the safest way of closing the company, settling any debt and allowing the value of the assets to be divided amongst shareholders. This process is often used in situations where Company Directors are approaching their retirement plan, and no one else has been appointed to replace them. It is also used for companies which have outlived their requirements and are no longer necessary as trading entities.

In all cases where assets amount to more than £25,000 (once any debts have been cleared) the company will need to appoint an Insolvency Practitioner (IP) to manage the liquidation process. This individual will assess the worth of the assets, ensuring that these are liquidated in the appropriate way, settling outstanding debts and dividing the remaining funds amongst all shareholders.

Is my Company Eligible for a MVL?

If your company is solvent, you will need to ensure that you have documentation to prove this. All financial documentation will contribute to your Declaration of Solvency, a document which uses financial details to confirm the solvency of a company. This information needs to be as accurate and up to date as possible, representing a true account of the company’s financial situation. If this information is misleading or inaccurate in anyway, this may implicate Directors in a charge of falsifying a Declaration of Solvency, which is a serious criminal offence.

It is important to consider your options before initiating any form of company closure, as there may be better alternatives available to your, or you may be able to avoid the repercussions of instigating the wrong proceedings for your circumstances, which can often carry legal penalties.  

Before initiating a MVL consider two things:


Could your company continue trading? What steps need to be implemented to achieve this? Do you sincerely want to close your company?


Are you closing due to financial pressures? In which case, your company may in fact be insolvent. If this is the case, a MVL may not be the right choice and may have serious repercussions. Speak to a Business Recovery Expert and assess all the appropriate forms of action available to you if you are unsure of your situation and the implications this has. 

Why Pursue a MVL?

MVLs are fairly simple and effective processes used by solvent companies that simply wish to cease trading. There a several reasons to consider the use of a MVL to close a business, including:

  • Directors or shareholders are approaching retirement and wish to realise any assets into their personal possession
  • The assets are realised in order for investment in a new business venture
  • The company may have exceeded its use and Directors/shareholders may wish to cease trading and shut down

What can I expect?

As with all company closures, a MVL must follow certain procedures. If you are considering a MVL, here’s what you might expect:

Phase 1: Initial Directors Meeting

Upon initiating a MVL, the Directors must hold an initial board meeting in which they will agree on the appointment of an Insolvency Practitioner who will serve as a Liquidator for the process.

Phase 2: Declaration of Solvency

This stage in proceedings is incredibly important and is one of the Directors’ main responsibilities in a MVL. The Directors must compose and sign a legally binding ‘Declaration of Solvency’. This is a document which relies on financial information to validate the financial status of the company (solvency). As an official document this must be signed by a majority of Directors (varying dependant on the size of the company) and be submitted and filed at Companies House.

It is incredibly important that this document represents the financial status of the company accurately. If this is found not to be the case, the Directors will be liable for charges of Falsifying a Declaration of Solvency which carries severe legal consequences.

Phase 3: Shareholders’ Meeting

This is a meeting held for the benefit of company Shareholders, which is organised during the initial Directors’ meeting. The purpose of this meeting is to notify the shareholders of the intended liquidation and the reasons for doing so. In order for the Liquidation to proceed, the shareholders must agree by a majority of 75% or over to the conditions of the Liquidation and the proposed IP who will manage proceedings.

This can be time sensitive, as approval must commence no later than 5 weeks after the company has filed its official Declaration of Solvency. Upon approval the Liquidation must also be published in the London Gazette.

Phase 4: The Liquidation

Once all documentation is submitted, approved and the appropriate action taken, the IP will commence proceedings as the Liquidator. They will assess the assets within the company, liquidate these in the most efficient way and then distribute the funds amongst both creditors and the shareholders.

Phase 5: Closing Meeting

Upon completion of the Liquidation process the IP/Liquidator must organise and hold a meeting between themselves and the company shareholders. In this meeting they will discuss the Liquidation, the process and ultimately inform the shareholders that the process is complete, and the company is dissolved.

Once this has gone ahead, they must also send a final notice to be published in the London Gazette, notifying them too of the dissolution of the company.

At this point the process is complete.

What is the cost?

When a company is in a state of financial trouble, it is natural that Directors will want to assess the costs of their options when making the right decision for their company.

Such is the case with many of company closure or recovery procedures, it is difficult to predict just how much a MVL will cost. This is due to a number of reasons from the size of the company and the complexity of the situation and the company’s financial position.

It is safe to assume that the starting figure for Liquidator fees is around £4000, so the overall price is likely to be in excess of this figure as there are other minor fees involved in the process (notices in the London Gazette, etc.)

As with any Recovery Solutions or Insolvency Procedures it is best to consider all the options available to your company. Addressing your concerns with an expert will help you make the right decisions for your company, whether this is Liquidation or attempted recovery. If you are unsure of your options or wish to speak to a professional about the specifics of your situation, get in touch with us today. Our team have appointments available for a no obligation consultation, giving you immediate advice when you need it most.