What This Guide Covers

This short guide explains what a Members’ Voluntary Liquidation (MVL) is, when and why it’s used, how the process works, who’s involved, and what company directors and their advisors need to know before starting. It ends with a few practical case studies.

What Is an MVL?

A MVL is a formal, solvent winding up of a company. It’s a structured, tax-effective process for closing a company that no longer needs to operate but still has enough assets to pay all its debts in full within 12 months.

When Is an MVL Used?

Company owners and their accountants commonly use an MVL:

• To extract retained and capital profits in a tax-effective way.
• To wind up a company after selling business assets.
• To close dormant companies as part of a group restructure.
• To finalise a family company or trust that is no longer needed.
• To distribute assets (cash, property, shares) back to shareholders.

Key Features of an MVL

Solvency: The company must be able to pay all its debts in full.
Declaration of Solvency: Directors must declare the company is solvent and can pay all creditors within 12 months.
Liquidator Appointed by Members: Shareholders pass a special resolution to wind up the company and appoint a registered liquidator.
Tax Efficiency: Final distributions can be more tax-effective than paying ordinary dividends, especially for capital reserves, revenue reserves and capital gains tax purposes.

MVL vs CVL: The Key Difference

A CVL (Creditors’ Voluntary Liquidation) is for insolvent companies that cannot pay their debts in full. An MVL is only for solvent companies.

How an MVL Works: Step by Step

Pre-Appointment Planning

We assess the company’s structure, current financial position, and tax status. We forecast the expected position during liquidation and immediately before final distribution. We review PPSR registrations, conduct historical ASIC searches, and confirm any outstanding ATO matters with the tax agent. We also check for any intellectual property or other commercial issues that should be considered before appointment. We draft all necessary minutes and resolutions.

Directors’ Resolution & Declaration of Solvency

The directors approve the winding up by board resolution and sign a Declaration of Solvency confirming that all debts will be paid within 12 months.

Shareholders’ Meeting

Shareholders pass a special resolution to wind up the company and appoint David Levi as liquidator.

Liquidator’s Role & Responsibilities

The liquidator takes control of the company’s affairs, complies with statutory requirements, obtains tax clearances, and distributes surplus assets to shareholders in consultation with the company’s tax agent.

Finalisation & Deregistration

When all matters are finalised, the liquidator lodges final accounts with ASIC, and ASIC proceeds with deregistration.

How Levi Consulting Can Help You

At Levi Consulting, we handle MVLs of all shapes and sizes — from family companies and professional services firms to holding companies. We have completed over 300 MVLs. We:

• Conduct a thorough pre-appointment review.
• Confirm eligibility for an MVL.
• Prepare clear steps and timelines.
• Liaise with your accountant.
• Manage the liquidation process efficiently as Liquidator.
• Aim to maximise after-tax outcomes for shareholders.

FAQs: Your MVL Questions Answered

Q: Can we just deregister instead of doing an MVL?

A simple deregistration is only suitable if there are absolutely no assets or liabilities. If the company has retained or capital profits, an MVL is usually safer and more tax effective.

Q: What if we sign a Declaration of Solvency and later discover debts?

Our pre-appointment review is designed to identify and resolve these risks before the liquidator is appointed.

Q: Is an MVL expensive?

Costs vary with complexity but are usually modest compared to the tax savings and finality it provides. Typically, we offer a fixed fee for pre-appointment planning and a separate fixed fee for the liquidation itself.

Q: Can we wind up multiple companies at once?

Yes. Many group restructures involve multiple MVLs to simplify group structures and reduce ongoing compliance costs.

Directors’ Checklist

Before starting an MVL, ensure:

• The company is genuinely solvent.
• All tax returns and BAS are up to date.
• There are no hidden or disputed liabilities.
• All directors agree to sign the Declaration of Solvency.

Real-World MVL Examples

Example 1 — Professional Practice Company

Two partners sell their consulting business. The company has retained profits and franking credits. An MVL allows profits to be returned to shareholders in a tax-effective way.

Example 2 — Family Investment Company

A family company holds cash after selling a commercial property. An MVL is used to finalise tax obligations and distribute funds to family members tax-effectively — especially for pre-CGT capital reserves.

Example 3 — Group Simplification

A large group with dormant subsidiaries uses multiple MVLs to wind up unnecessary companies and reduce compliance costs.

Talk to Levi Consulting

We regularly manage MVLs for family companies, professional practices, property companies, and larger groups. If you’re considering winding up a solvent company, talk to us early. We’re here to guide directors, accountants, and family advisors step by step.

Contact David Levi today for a confidential discussion.