Members Voluntary Liquidation

A members voluntary liquidation occurs when a solvent company is wound up, when the directors wish to retire or when the directors determine the company has no further useful purpose, to realise its assets and distribute its surplus to the shareholders in a tax efficient way. The gain on shareholders funds is normally taxed at the Capital Gains Tax rate as opposed to the higher Income Tax rate so that a members voluntary liquidation can be a tax efficient way for shareholders to restructure organisations or withdraw funds from a company on business cessation.

The directors must swear a Statutory Declaration of Solvency which summarises the company’s assets and liabilities and the directors state that the company will be able to pay all of its debts in full within twelve months of the commencement of the liquidation. Once the Declaration is sworn a copy of it must be sent to all shareholders together with a formal notice of the shareholders meeting. At the shareholders meeting a special resolution must be passed i.e. is 75% of the shareholders voting must vote in favour of the resolution.

Certain assets for example freehold property can be distributed to shareholders in specie, that is in kind. An advantage of in specie distributions is that no stamp duty is payable.

We can advise on preparing the Statutory Declaration of Solvency and advise on the procedures necessary for the calling of an Extraordinary General Meeting including the filing requirements to achieve an orderly wind down and distribution of assets.

For more information on Members Voluntary Liquidation, please contact William Carey on wbc@careyaudittax.ie or call 061 372001