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Members Voluntary Liquidation (“MVL”) is a process used to wind up a company that is solvent in accordance with the Companies Act 2014.
Types of Companies entering the process
There may be companies that have cash or assets in them that they wish to extract from the company, in the most official way from a legal and tax perspective. These often come in the form of fund companies where they were set up for a specific purpose, e.g. Special Purpose Vehicle or shareholders of a family owed business seeking retirement.
The MVL Process
The MVL process is a formal process that seeks the appointment of a liquidator to a solvent company in order to wind the company up and distribute the assets, (be it cash or other) to the shareholder of the company.
To place the company into an MVL, the following is required:
Once appointed, the liquidator will write to all parties affected by the liquidation, pay any accruals, seek Revenue clearance and distribute the balance of funds or physical assets to the shareholder. It is important that all tax returns and liabilities are filed and discharged up to the date the liquidator is appointed.
This is a straight forward process that leaves the final matters of the company for the liquidator to deal with taking the stress away from directors and shareholders.
What is a key advantage of an MVL?
This can be a tax efficient way for shareholders’ to extract funds from a company on cessation of trade as a capital gain on shareholders’ funds will be subject to Capital Gains Tax.
Where such funds are taken out as salary or dividend pre-liquidation, these monies would have been taxed at the shareholders marginal income tax rates.
It is important to obtain tax planning advice prior to any cessation of trade or liquidation to ensure that tax costs can be minimised and the return to shareholders maximised.
How can we help?
If you feel this is an option you would like to explore more for your company or perhaps you are a fund manager seeking to conclude the life of the Company in accordance with the Companies Act 2014 or with the Central Bank, please give us a call today to discuss your options.
Our experts can guide you through the process and assist with the pre liquidation considerations and documentation. Post liquidation, we can also act as liquidator and take a number of matters out of your hands to be dealt with as part of the process.