Biztalk: Corporate Recovery Series #9 What is Members’ Voluntary Liquidation?

What is Members’ Voluntary Liquidation or MVL in short? Members’ Voluntary Liquidation is a formal liquidation process whereby solvent companies would be wound-up and assets are realised and distributed to its shareholders.

Prior to commencement

The company’s accounts and records must be up to date.

The directors would need to assess if the company would be able to pay all its debts (current and future/potential liabilities) within a period not exceeding 12 months and make a solvency declaration. The declaration of solvency together with a statement of assets and liabilities shall be lodged with the authority prior to calling of members meeting.

The declaration of solvency shall not be taken lightly as directors whom makes a declaration without having reasonable grounds commit an offence and be liable for imprisonment not exceeding 5 years or a fine not exceeding 3 million ringgit or both upon convicted.

A members meeting will then be called to pass special resolutions to voluntarily wind-up the company.

Commencement of winding-up

Upon passing of resolutions and filing of necessary documents, the company will then be placed in a Members’ Voluntary Liquidation. The power of the directors ceased and the company will be placed in the hand of the Liquidator.