A members' voluntary liquidation can only take place if the company is solvent.
directors must make a formal declaration of solvency, which must:
• be made by the majority of directors on a date no more than 5 weeks before the passing of the resolution for voluntary winding up;
• be filed at Companies House;
• state that the directors have made a full inquiry into the company's affairs and are of the opinion that the company can pay its debts and interest within a maximum of 12 months; and
• include an up-to-date statement of the company's assets and liabilities.
It is a criminal offence to make a declaration of solvency without reasonable grounds.
The shareholders must hold a general meeting of the company that passes a resolution:
If it later turns out that the company is not solvent, the liquidator will call a meeting of creditors and the liquidation becomes a creditors' voluntary liquidation (creditors’ voluntary liquidation)
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