Members Voluntary Liquidation

A popular choice for directors of a company who are seeking to retire is to place the company into a Members Voluntary Liquidation, as this is a Tax efficient way of releasing any capital gain received on their shares will be taxed at just 25%, if the surplus money was taken as a salary it would be taxed at a much higher tax rate.

Directors are obliged to swear to a Statutory Declaration of Solvency if they wish to place the company into a members Voluntary Liquidation. The declaration shows the companies assets and liabilities and a statement that the company is able to pay off all debts in 12months of the commencement of the Liquidation, this must be accurate, any false information will inflict serious consequences for the directors.

A copy of declaration must then be sent to all sharholders, together with a notice of the shareholders meeting, during the meeting a vote of 75% of the shareholders must vote in favour for the resoloution.

Specie distributions is a popular way to assign assets to shareholders, allowing freehold property to be transferred to shareholders directly, a great advantage to this process is that no stamp duty fee.

Its an offence for certain persons such as: an auditor, servant, account or officer of the compnay to asct as a liquidator, under the section  300a of 1963 Companies Act.