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What is a Members’ Voluntary Liquidation?
A Members’ Voluntary Liquidation (MVL) is a statutory procedure that involves the appointment of a liquidator by the shareholders to complete a solvent winding up of a company.
If you have a solvent company that has fulfilled its purpose, you can avail of an MVL. This method of winding up may be used for a number of reasons, such as:
- extracting cash
- cessation of activities
- tax/succession planning
- restructuring
This is an effective method for shareholders to unlock company assets in a tax efficient manner or dispose of dormant companies that are no longer required thereby reducing unnecessary costs, management time and risk exposure. For the directors of a company, this process finalises their corporate responsibilities and avoids many of the potential problems associated with striking off or maintaining a dormant company.
To avail of this method of winding up, a company must be solvent and have sufficient realisable assets to discharge all of its liabilities within a prescribed timeframe.
- Eliminates external cost.
- Reduces internal cost (removes unnecessary annual compliance costs and regulatory burden).
- Protects against corporate memory loss.
- Mitigates risk (contingent claims/strike-off/loss of corporate memory).
- Better corporate governance.
- Tax efficiency (return of surplus capital to shareholders).
- Reduced management time input.
- Method of corporate simplification.
- Provides certainty when dissolved.
MVL vs Strike-off
Under strike-off, any remaining assets vest in the state and companies can be reinstated up to 20 years after strike-off. However, following conclusion of an MVL, the maximum period for reinstatement is much shorter at 2 years.
- Operational Review – To ensure operations of wider group associates are not impacted by the proposed liquidation.
- Taxation Review – To ensure the winding up is dealt with in the most tax efficient manner.
- Balance Sheet Clean Out – To reduce the amount of assets/liabilities to be realised/discharged by the liquidator.
- Directors Board Meeting – To sign the declaration of solvency (by all or a majority of directors) and convene the EGM.
- Independent Persons Report (IPR) – Following a review of the balance sheet the IPR is issued by the auditor’s and attached to the declaration of solvency.
- Shareholders Extraordinary General Meeting (EGM) / Shareholders Resolutions – Resolutions are passed at the EGM to place the company into liquidation.
- Board Meeting
- Declaration of Solvency
- Independent Persons Report (IPR)
- Shareholders’ Extraordinary General Meeting / Shareholder Written Resolution
- Company in Liquidation
- Revenue Clearance
- Final Meeting & Distribution
- Company Winding Up Complete
- Shareholders/Directors of a solvent family-owned business seeking retirement.
- Solvent companies that have realised their potential/fulfilled their role/reached the end of their investment lifecycle (funds/ICAVs/Section 110 SPVs)
- Dormant/inactive solvent companies.
When is an MVL Suitable?
The MVL route is open to any solvent company that has either discharged its debts or will undertake those debts within a 12-month period.
Our experience
RSM have significant expertise in relation to MVLs, having helped wind up numerous solvent companies operating in a wide range of sectors, including individual entities through to managing group rationalisation projects for large PLCs.
In addition, we have extensive experience working with corporate administrators, directors and shareholders in the orderly winding up of financial services companies e.g. ICAVs, Section 110 entities.
Our MVL experience includes working with:
- Financial Services Companies
- Funds
- SPVs
- ICAVs
- Section 110 entities
- PLCs
RSM Ireland is a member of the Global RSM network. As an integrated team, we share skills, insight, and resources, as well as a client-centric approach based on a deep understanding of your business.
For a confidential discussion about your specific requirements, please contact a member of our dedicated MVL team.
RSM’s MVL Team advise that you should seek advice prior to commencing the liquidation to ensure that an appropriate strategy is adopted to maximise the return on investment for shareholders.
