Voluntary winding up, also known as voluntary liquidation, is a process by which a company decides to dissolve itself on its own terms, as approved by the shareholders of the company. It is a self-imposed windup and dissolution of a company that has been approved by its shareholders. The decision to wind up voluntarily usually occurs when the company is solvent but needs to liquidate its assets to meet its upcoming obligations. The process is initiated by a companys shareholders or ownership when they vote for a resolution to cease further operations. The liquidation can proceed only with the shareholders approval, and stockholders owning three-quarters of a companys shares must vote in favor of a voluntary liquidation resolution for the motion to pass. The process is slightly different in the U.S. and the U.K., but both require that the board of directors institute the process and that a specified percentage of shareholders approve it. The advantages of winding up a company voluntarily are that there are limits to the directors liability, and it is a private process with minimal. To wind up a company voluntarily, the following must take place:
- Members should have a board meeting, and a statutory declaration should be made declaring that the company is either solvent or insolvent.
- A statement of accounts may be required to show all assets and liabilities of the company.
- All necessary documents should be sent to the companies registrar.
In a members voluntary liquidation, the liquidator must hold a meeting of the company each year and provide details of his or her actions and dealings, and of the conduct of the winding up in the preceding year.
