A Members Voluntary Liquidation ("MVL") is a process undertaken by a solvent company to wind up its affairs in an orderly manner when the company has concluded its activities and the shareholders wish to distribute the remaining assets amongst themselves.

To avail of a MVL, the company must be solvent i.e. the directors must be able to execute a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.

The steps involved

All or a majority of the directors of the company must complete a statutory declaration that they are of the opinion that the company will be able to pay its debts in full within 12 months of the commencement of the winding up.

• The declaration of solvency must include a statement of assets and liabilities of the company
• An independent accountant (usually the company's auditor) must provide a report stating that the statement of assets and liabilities is reasonable and that the Directors' opinion referred to in the declaration of solvency is reasonable. The accountants will work closely with the company to review and confirm all figures involved.
• The independent accountant must also provide a statement that they have given and not withdrawn his consent to the issue of the declaration of solvency.
• A shareholder(s)' written resolution is passed appointing the liquidator. Upon execution of the written resolution, the liquidator stands appointed and the company is officially in liquidation. At that point in time, the powers of the directors in respect of the assets of the company cease.
• The original copy of the declaration of solvency (with independent accountants report appended thereto), notice of the special resolutions and notice of the appointment of the liquidator are filed with the Companies Registration Office.

The liquidator's role

• Once appointed, the liquidator takes charge of the company. This involves the collection and realisation of assets and applying the proceeds in the following order:

1. The liquidator’s own costs,
2. Payment of creditors in full,
3. Payment of the balance to shareholders in accordance with their rights under the constitution of the company.

• When the affairs of the company are wound up in full the liquidator must prepare a final account demonstrating how the liquidation has proceeded and this is then presented to a general meeting of shareholders.
• Within a week of the final meeting, the liquidator sends to the CRO a copy of the final account and notifies the CRO of the date of holding of the final meeting. The company will then be removed from the register of companies three months after the date of registration of this final liquidator's return with the CRO. The company's status will update on the CRO to "dissolved".

Typically, a MVL liquidation takes approximately 6-12 months to complete. One of main tasks in completing the MVL is the necessity for the liquidator to apply to the Revenue Commissioners and obtain clearance in respect of all relevant taxes. The liquidator must also obtain legal and insurance clearance from the relevant parties.

What happens post dissolution?

One of the advantages of a MVL is that the period of time afforded to apply to the High Court for a declaration that the dissolution be declared void (and the liquidator reappointed) is two years post-dissolution.

By way of contrast, the alternative option of a voluntary strike off has a possible restoration period of 20 years. As well as this lack of finality, we do not recommend a voluntary strike off where the company at any stage held assets, incurred liabilities or was a party to any agreements or contracts. Having a liquidator appointed with the statutory duty to wind up the company's affairs ensures that the company is being dissolved in an orderly manner.

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