Members Voluntary Liquidation (MVL)

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  When should I consider an MVL?

  You may consider a Members Voluntary Liquidation if:

  • Your company is solvent and able to pay all liabilities in full within 12 months

  • You want to extract profits in a tax-effective way as a return of capital

  • You want to close the company cleanly without ongoing exposure or compliance obligations

  • You are restructuring your personal or family wealth

  • You are exiting business ownership and want a safe and legally sound end point

  • You wish to distribute remaining assets, including in-specie distributions

  An MVL is often chosen instead of simply deregistering a company because it provides proper finalisation, protects directors, and ensures all assets are distributed correctly under the Corporations Act.

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  What are the benefits of an MVL?

  A Members Voluntary Liquidation provides several advantages for solvent companies looking to complete a clean and compliant exit:

  ✓ Tax-effective distribution of assets
  Surplus assets can be distributed as capital, which may provide more favourable tax outcomes for shareholders.

  ✓ Clear and final closure of the company
  The company is wound up correctly under the Corporations Act, removing ongoing reporting and compliance obligations.

  ✓ Minimises future risk
  An MVL provides protection against future claims and liabilities once the company is deregistered.

  ✓ Transparent and structured process
  A registered liquidator manages the entire wind-up, ensuring all assets are realised properly and all company affairs are finalised.

  ✓ Allows shareholders to unlock value
  Funds and assets can be returned to shareholders efficiently, providing clarity and certainty during the exit.

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  How does the MVL process work?

  • Initial consultation
    We meet with you to review your company, confirm solvency and determine whether an MVL is suitable. This is a no-cost, no-obligation discussion.

  • Solvency assessment and planning
    Before an MVL can proceed, directors must sign a Declaration of Solvency confirming the company can pay all debts in full within 12 months. We help you understand the requirements and prepare all necessary steps.

  • Pre-liquidation preparation
    The company is prepared for wind-up. This may include:
    • Paying all creditors and tax liabilities
    • Finalising employee entitlements
    • Collecting outstanding debts
    • Converting assets to cash
    • Ensuring ASIC and ATO lodgements are up to date
    • Arranging any in-specie distributions

  Good preparation helps reduce both the cost and duration of the MVL.

  • Shareholder resolutions
    Shareholders pass a special resolution to wind up the company and appoint a registered liquidator.

  • Liquidator takes control
    Once appointed, the liquidator:
    • Finalises remaining matters
    • Realises any outstanding assets
    • Distributes surplus funds or assets to shareholders
    • Lodges ASIC and ATO documents
    • Prepares the final account of the liquidation

  • Deregistration
    When all tasks are complete, the company is formally deregistered, bringing the process to an end and closing all compliance obligations.

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  What questions should you ask?

  Before proceeding with a Members Voluntary Liquidation, it is important to consider a few key questions:

  • Is my company genuinely solvent?
    Solvency must be clear and supported by accurate financial information. Directors face consequences if solvency is declared incorrectly.
  • What are the tax implications of distributing assets through an MVL?
    Capital distributions may offer different tax outcomes compared to dividends.
  • Are there any contingent or future liabilities I need to consider?
    A thorough review helps ensure there are no unexpected issues once liquidation begins.
  • Is an MVL the best option, or should I consider alternatives?
    In some situations, a restructure, sale, or controlled exit may provide a better commercial outcome.
  • Are my records, accounts, and lodgements up to date?
    Accurate and complete financials are required before signing the Declaration of Solvency.
  • How will each shareholder be impacted by the distribution?
    Tax outcomes and entitlements may vary depending on share class and individual circumstances.

  Contact the de Jonge Read® team today for a no-cost, no-obligation discussion to understand your options today.

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