Members’ Voluntary Liquidation
A Members’ Voluntary Liquidation is the process for winding up a solvent company. A company is solvent if it can pay its debts as and when they fall due. The objectives of this process are to:
- realise the assets of the company,
- distribute the proceeds to the shareholders in accordance with their rights after satisfying any creditor claims, and
- free shareholders of a corporate structure that they no longer require.
In a members’ voluntary winding up, the person to be appointed need not be a registered Liquidator if the company is an exempt proprietary company or a subsidiary of a public company. But in practice, a registered Liquidator is often chosen.
In order for a Liquidator to be appointed, a directors’ meeting is held to execute a Declaration of Solvency, stating that the company will be able to pay all its debts within 12 months. Attached to this declaration is a Statement of Assets and Liabilities. A general meeting of shareholders is then convened.
As the resolution for winding up is a special resolution, at least 21 days notice of the meeting is required to be given. However, this period can be shortened if 95% of shareholders consent to short notice.
The above information is by necessity, general in nature and its brevity could lead to misunderstanding. For further information, you are invited to contact O’Brien Palmer.