fbpx

Members’ Voluntary Liquidation | What is it and how does it apply to me?

Aug 11, 2022

There are various ways to wind up or liquidate a limited liability company. Each method will essentially realise the assets of the company and distribute the proceeds to the company’s creditors or shareholders, but they are individually unique as to the processes that need to be followed.

One such method is a Members’ Voluntary Liquidation.

What is a Members’ Voluntary Liquidation?

Under a Members’ Voluntary Liquidation, the shareholders of a company themselves resolve to wind-up the company with an insolvency practitioner then being appointed as liquidator.

This liquidator will then realise and distribute the company’s assets to its creditors and shareholders before striking the company off the register.

What is the process that needs to be followed?

Contrary to other forms of liquidation, a company cannot be insolvent for a Members’ Voluntary Liquidation to apply. In fact, not more than five weeks before the shareholders resolve to place the company into Members’ Voluntary Liquidation, the directors must issue a “statutory declaration of solvency”.

This statutory declaration of solvency must state that the directors have made a full inquiry into the company’s affairs and are satisfied it is in a position to pay its debts in full.

Consequently, the creditors need not be involved in the winding-up process directly as they will be paid in full following the realisation of the company’s assets.

What does this mean for me as a director?

Provided that the directors have complied with their duty to assess the solvency of the company, the only consequence for them (in relation to the Members’ Voluntary Liquidation) will be that their powers will automatically cease (unless the liquidator states otherwise) once the liquidator has been appointed.

If, however, the liquidator is of the opinion that the directors failed to satisfy their duty to assess the solvency of the company, disciplinary procedures may be commenced and legal advice should be sought.

What does this mean for me as a shareholder?

Aside from resolving to place the company into Members’ Voluntary Liquidation, there is little to do for a shareholder once the liquidator is appointed, other than to receive any payment of surplus assets once the creditors have been repaid in full.

The above only provides a brief and generic overview of Members’ Voluntary Liquidations, and professional advice should be sought (including from solicitors, accountants and insolvency practitioners) before any steps are taken to wind-up a company.

How we can help

Here at Herrington Carmichael, one of our specialisms is assisting with the legal and procedural aspects of corporate insolvency, including Members’ Voluntary Liquidations. If you require further advice regarding any corporate insolvency matter in respect of your business, please contact Edward Beedham in our Corporate department. You can also email your query to edward.beedham@herrington-carmichael.com, call 01276 686222.

This reflects the law at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought as appropriate in relation to your own particular matter before action is taken.

Edward Beedham

Edward Beedham

Solicitor, Corporate and Commercial
t:
 01276 854666
e: edward.beedham@herrington-carmichael.com

Latest Articles


 

PODCASTS

The Legal Room UK Podcast features a diverse range of specialists offering expertise on a variety of topics.
You can Subscribe on whatever podcast platform you use.

Top Legal Insights

 

Contract Law

Material Breach of Contract

What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?

Property Law

Commercial Lease: The Financial impact on Landlord and Tenant

Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.

Divorce and Family Law

Divorce in Lockdown: Can I get some discreet legal advice?

We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...

Land & Property Dispute

Restrictive Covenants – The Price of Modification

Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?

Wills, Trusts and Probate

Why is having a will so important?

It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having a Will.

Award winning legal advice

We are solicitors in Camberley, Wokingham and London. In 2019, Herrington Carmichael won ‘Property Law Firm of the Year’ at the Thames Valley Business Magazines Property Awards, ‘Best Medium Sized Business’ at the Surrey Heath Business Awards and we were named IR Global’s ‘Member of the Year’. We are ranked as a Leading Firm 2022 by Legal 500 and Alistair McArthur is ranked in Chambers 2021.

Camberley
Building 2  Watchmoor Park, Riverside Way, Camberley, Surrey  GU15 3YL
+44 (0)1276 686 222

Reading (Appointment only)
The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA
+44 (0)1276 686 222

Ascot (Appointment only)
102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY
+44 (0)1344 623388

London (Appointment only)
60 St Martins Lane, Covent Garden, London WC2N 4JS
+44 (0)203 326 0317

Wokingham (Appointment only)
4 The Courtyard, Denmark Street, Wokingham, Berkshire RG40 2AZ
+44 (0)118 977 4045

Email: info@herrington-carmichael.com

Our Services

Corporate Lawyers
Commercial Lawyers
Commercial Property Lawyers
Conveyancing Solicitors
Dispute Resolution Lawyers
Divorce & Family Lawyers
Employment Lawyers
Immigration Law Services
Private Wealth & Inheritance Lawyers
Startups & New Business Lawyers

© 2022 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

Herrington Carmichael is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.

Pay Online

Privacy Policy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies 
Client Feedback   |  Diversity Data