Members’ Voluntary Liquidation

A Members’ Voluntary Liquidation (MVL) is a process by which the assets of a company are able to be distributed to its creditors and members under the control of a liquidator who is subject to the legislative requirements of the Corporations Act 2001 (Act).

An MVL may also be used in the winding up of solvent associations and co-operatives, as the procedures set out in the Act are generally adopted by the various State Acts under which Associations and Co-Operatives are governed.

An MVL can only be used when a company is solvent, i.e. able to pay its debts (including related entity debts such as shareholders’ loans) in full within 12 months of the commencement of the winding up.

Why would an MVL be used?

• Simplification of a group structure wherein the more subsidiary companies the greater the compliance costs.

• The reason for the company’s existence is no longer relevant, or the company has achieved its purpose (such as in the construction industry)

• A family company has outlived the first and perhaps even second-generation founders and the present shareholders no longer wish to be in business together or want access to any shareholders’ entitlements they may have.

• It provides a measure of security, as a Liquidator is appointed if the company is revived (for example, to answer historical insurance claims).

The MVL Process

Upon the appointment, the liquidator will:

• notify the ATO and other statutory bodies of the appointment of the liquidator, and advertise for any claims against the company.
• identify and take control of all of the company’s assets.
• instruct the company’s tax accountant to prepare the final accounts and tax lodgements up to the date of liquidation and ensure the final tax payment is made.
• seek clearance from the ATO to distribute the company’s assets in accordance with Section 260-45 of the Tax Administration Act 1953.
• lodge an account of the liquidation with ASIC. The company is deregistered 3 months after the lodgement of this account.

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Our team will work with you throughout the process, ensuring the best possible outcome