Members' Voluntary Liquidation

GOV.UK guidance identifies three types of liquidation, describing 'members' voluntary liquidation' as the option where 'your company can pay its debts but you want to close it', as distinct from a creditors' voluntary liquidation (where the company cannot pay its debts) or a compulsory liquidation ordered by the court. Guidance on winding up a company you no longer want to run explains that 'you may choose members' voluntary liquidation if your company is 'solvent' (can pay its debts)' and, for example, you want to retire or step down from the business.

Before a members' voluntary liquidation can proceed, the directors must make a 'declaration of solvency'. Guidance states that 'to pass a resolution for members' voluntary liquidation, you must make a 'declaration of solvency'', which must be signed by a majority of directors and must set out how long it will take the company to pay its debts — 'this must be no longer than 12 months from when the company's liquidated'. After the declaration is signed, shareholders must pass a resolution for voluntary winding up and appoint a licensed insolvency practitioner as liquidator; the resolution must then be advertised in The Gazette 'within 14 days', and the signed declaration sent to Companies House 'within 15 days of passing the resolution'.