The MVL procedure can typically be useful when directors decide for whatever reason that a company should cease to trade and that its affairs should be fully wound up. It can be a tax efficient vehicle for shareholders to realise their capital investment in a company.

An MVL is not strictly an insolvency procedure as the company must formally be declared by the directors to be solvent. A licensed insolvency practitioner is appointed by shareholders to realise assets if not already done by the directors, to pay remaining creditors in full, and to make capital distributions to shareholders.

In the process of winding up the company's affairs, the value of company assets and of shareholders' capital is crystalised and there can often be significant taxation implications for the company and the shareholders. Careful tax planning must therefore be carried out well before appointment of a Liquidator.