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 the shareholders.

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

Following receipt of all necessary professional advice, the Directors and/or Shareholders will make a Declaration of Solvency. That 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. A sworn copy must be filed at Companies House no later than 15 days after the date of the Resolution appointing a Liquidator.

The Special Resolution, appointing a liquidator, must be passed by the Shareholders. The requisite majority will be specified in the articles of the Company. Formal notice must be sent to the shareholders, and usually 21 days is required. Again, this is specified in the Articles. A copy of the Resolution must be filed at Companies House and advertised in the London Gazette as well as locally.

The Insolvency Practitioner, working with the accountant, will agree with the Inland Revenue and Customs and Excise any liabilities that the company may have. Those and all 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 meetings to turn the Members Solvent liquidation into a Creditors Voluntary Winding up under Sec 98. Further details may be found in our other leaflet.