Kevin Mcleoud Insolvency Practitioner
Written By Kevin McLeod
Licensed Insolvency Practitioner
January 26th, 2022

When a company decides to liquidate voluntarily it first needs to pass a resolution for winding up to begin the process.

The same process is relevant for both voluntary insolvent (CVL) and voluntary solvent (MVL) procedures.

This article will explain what that is and how to pass one.

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What Does an Extraordinary Resolution to Wind up Mean?

In company law, a special or ‘extraordinary’ resolution must be passed by 75% of shareholders (by value of shares). By contrast an ordinary resolution simply needs a majority to pass.

Special resolutions are designed to protect minority shareholders from missing out on important decisions.

This type of resolution is only used in particular circumstances, for example when a company decides to voluntarily liquidate.

This may be either due to insolvency, or because the company is being closed via a members voluntary liquidation procedure.

What is the Procedure for Voluntary Winding up?

The process of passing an extraordinary resolution to wind up is fairly simple.

  1. If a company feels it is insolvent (or wishes to pursue a solvent liquidation aka MVL), it is usually a director who makes contact with an insolvency practitioner such as ourselves to discuss the situation.
  2. If the conclusion is that liquidation represents the best way forward, you will need to call a shareholders meeting to pass the resolution.
  3. Resolutions are generally passed by a show of hands or by a written resolution.
  4. Following the resolution the liquidator will assume control of the company and commence the process of dealing with creditors and realising assets. Directors powers will cease at this point.

What Legislation Covers the Special Resolution for Voluntary Winding Up

The key legislation can be seen here in Section 84 1 (b) of the Insolvency Act

Part of this stipulates that all resolutions to wind up be advertised in the Gazette, the Official Journal of Public Record.

Resolutions to Wind up Can be seen via Notice 2441 on the Gazette website.