Part 1 – Background and definitions

January 2014  

56.3.2 Introduction

A company may be wound up voluntarily by its members or compulsorily by the court [Note 1]. Any company registered under the Companies Act 2006 [Note 2] may consider voluntary liquidation. An unregistered company cannot be wound-up voluntarily under the provisions of the Insolvency Act 1986 unless it was incorporated elsewhere in the EU with its “centre of main interest” in England or Wales (see paragraph 56.3.3) [Note 3]. The provisions relating to voluntary liquidations are contained in Parts IV (excluding Chapter VI), VI and VII of the Insolvency Act 1986 and Part 4 of the Insolvency Rules 1986 as specified in Rule 4.1. 

56.3.3 Voluntary liquidation of companies incorporated in other EU countries

As a result of the EC Regulation on insolvency proceedings it is possible for a company registered in another EU member state to be wound up voluntarily in the UK if it has a “centre of main interest” in England or Wales. Further information on the “centre of main interest” is contained in Part 5 of Chapter 41 and, with regard to the winding up of foreign companies, paragraph 41.21.  

56.3.4 Definitions

The members can place a company in voluntary liquidation if and when they wish to wind up its affairs.  There are two types of voluntary liquidation: 

• A members’ voluntary liquidation (MVL) (see Part 3) where the company’s directors are able to make a declaration of solvency (see paragraph 56.3.38). 
• A creditors’ voluntary liquidation (CVL) where the company directors cannot make a declaration of solvency (see Part 4).

56.3.5 Voluntary liquidation - recent legislative changes

The Legislative Reform (Insolvency)(Miscellaneous Provisions) Order 2010 (LRO 2010) and The Insolvency (Amendment) Rules 2010 (IAR 2010) made a number of changes in relation to voluntary liquidations. The amendments apply to cases where the resolution for voluntary winding up was passed on or after 6 April 2010 unless the company went into liquidation under Paragraph 83 of Schedule B1 to the Act and the preceding administration:

• commenced before 6 April 2010, or
• resulted from an application for an administration order presented before 6 April 2010.  

Full details of the transitional provisions can be found in Article 12 of LRO 2010 and Schedule 4 to IAR 2010. The text in the rest of the chapter makes it clear where and when the transitional provisions apply.

[Back to Introduction] [On to Part 2 Matters applicable to all voluntary liquidations]