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An MVL takes place when the director(s) swear a statutory declaration stating their belief that the company has sufficient assets to be able to pay all of its creditors in full (together with all costs and statutory interest) within 12 months.
This usually takes place when the director(s) of a company believe that the company is solvent and no longer wishes for the company to trade. This could be due to retirement or the end of a project for example.
An MVL may enable shareholders to obtain Entrepreneurs Relief on distribution made within to them within the liquidation, leading to significant tax savings.
The statutory declaration will state that the directors have made a full inquiry into the company’s affairs. The declaration will include a statement of the company’s assets and liabilities as at the latest practicable date before making the declaration.
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