Voluntary liquidation can only take place through the shareholders of the company. A liquidator has to be appointed and must have authorisation to take on this role.
Voluntary liquidation comes in two forms. The first is when a company's shareholders decide to put the company into liquidation. This is called Members' Voluntary Liquidation. The assets are sufficient at this stage to pay off all the company's debts. The second type is when MVL a decision is made by the company's shareholders to place the company into liquidation but there is insufficient credit available to pay all the money owed to creditors. The liquidation starts from the time the decision was made to liquidate the company. This is referred to as Creditors' Voluntary Liquidation.
The company has to be solvent before a members' voluntary liquidation can take place. The directors have to announce the solvency. This has to be completed by most of the directors at a time that does not exceed 5 weeks before the resolution is passed for the voluntary winding up of the company. It has to be lodged at Companies Registry and the directors must have conducted an extensive inquiry into the affairs of the company and indicate that the company has the capability to pay off any debts and interest within 12 months. A current statement detailing the liabilities and assets has to be provided too.
It is a requirement that the shareholders pass a special resolution for winding up at a company general meeting. At this point, a liquidator is appointed. If the company is unable to run its business any longer due to its liabilities, then what is called an extraordinary resolution will be required. If it is later discovered that the company is not actually solvent, it is a requirement for the liquidator to call a creditors' meeting and the liquidation then has to become a creditors' voluntary liquidation.
If the company's directors fail to make a solvency declaration, or the company is defined as insolvent, the shareholders still have the chance to opt for voluntary liquidation. This is when a creditors' voluntary liquidation can take place. To vote for a creditors' voluntary liquidation, the shareholders are required to conduct a company general meeting and pass a voluntary winding up resolution.
The company is then able to hire an insolvency expert to be the liquidator. A creditors meeting has to be called as well, which is normally on the date of the meeting with the shareholders. The creditors do have the opportunity to nominate a liquidator which takes preference over the one nominated by the shareholders if there is a dispute over the nomination.
Once the company has gone into voluntary liquidation, control over the company's affairs is transferred to the liquidator. He or she will dispose of the assets of the company MVL and pay any expenses that have occurred. The remainder of the money gets passed onto the creditors. As soon as the company's affairs have been completed and the company has been wound up, final meetings will be held by the liquidator of the company and its creditors.