A members’ voluntary liquidation refers to the dissolution process of a limited company undertaken by shareholder consent rather than due to insolvency.
Key Stages:
- A resolution is passed by shareholders agreeing to voluntarily wind up operations.
- Members appoint a liquidator to oversee conversion of assets into cash to repay credited amounts according to priority rankings.
- Publication of members’ declaration of solvency confirms the company can pay outstanding debts in full.
Example:
The two members of an architect firm opted to voluntarily liquidate its assets after both deciding to relocate overseas, resulting in a successful closure.
Significance:
When properly executed under regulatory oversight, members’ voluntary liquidation facilitates the orderly dissolution of viable companies at the shareholders’ discretion to end operations without stigma of failure.