Members Solvent Winding Up

A Members Solvent Winding Up occurs when the shareholders and directors wish to terminate the trading of the company and distribute the funds between shareholders.

Prior Considerations:
It is essential that correct tax advice is received at this time. Normally the accountant who has acted for the Company will be the appropriate person to give that advice. The winding up itself must be performed by a Licensed Insolvency Practitioner.

Declaration of Solvency:
Following receipt of all necessary professional advice, the Directors and /or shareholders will make a Declaration of Solvency. This is a summary of the company’s assets and liabilities. The Declaration must be made no more than 5 weeks prior to the date of the Resolution appointing a Liquidator. The Directors must state in the Declaration that the company will be able to pay all its debts within a period of 12 months.

Meeting of Shareholders:
Formal notice of a Meeting of Shareholders must be sent to the shareholders, and usually 14 or 21 days notice is required.

The requisite majority will be specified in the Articles of the Company. The shareholders may agree to ‘short notice’ being given. Again, this is specified in the Articles.

The Special Resolution, appointing a Liquidator, must be passed by the shareholders.

The Liquidator’s Duties:
The Liquidator will file the Resolution and the Declaration of Solvency at Companies House and advertise the appointment in the London Gazette.

The Insolvency Practitioner, working with the accountant, will agree with H M Revenue & Customs any liabilities that the company may have. Those and any other liabilities must be settled before any distribution is made to the shareholders.

If, for any reason, the company is not able to settle its debts, the liquidator may have to call a meeting to turn the Members Solvent Liquidation into a Creditors Voluntary Winding Up.

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