• Private Companies

    • 583. Reduction of capital supported by solvency statement

      (1) A resolution for reducing share capital of a private company limited by shares is supported by a solvency statement if-
      (a) the directors of the company make a statement of the solvency of the company in accordance with section 584 (a “solvency statement”) not more than 15 days before the date on which the resolution is passed, and
      (b) the resolution and solvency statement are registered in accordance with section 585.
      (2) Where the resolution is proposed as a written resolution, a copy of the solvency statement must be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him.
      (3) Where the resolution is proposed at a general meeting, a copy of the solvency statement must be made available for inspection by members of the company throughout that meeting.
      (4) The validity of a resolution is not affected by a failure to comply with subsection (2) or (3).

    • 584. Solvency statement

      (1) A solvency statement is a statement that each of the directors-
      (a) has formed the opinion, as regards the company’s situation at the date of the statement, that there is no ground on which the company could then be found to be unable to pay (or otherwise discharge) its debts, and
      (b) has also formed the opinion-
      (i) if it is intended to commence the winding up of the company within 12 months of that date, that the company will be able to pay (or otherwise discharge) its debts in full within 12 months of the commencement of the winding up, or
      (ii) in any other case, that the company will be able to pay (or otherwise discharge) its debts as they fall due during the year immediately following that date.
      (2) In forming those opinions, the directors must take into account all of the company’s liabilities (including any contingent or prospective liabilities).
      (3) The solvency statement must be in the prescribed form and must state-
      (a) the date on which it is made, and
      (b) the name of each director of the company.
      (4) If the directors make a solvency statement without having reasonable grounds for the opinions expressed in it, and the statement is delivered to the Registrar, a contravention of these Regulations is committed by every director who is in default.
      (5) A person who commits a contravention of subsection (4) is liable to a fine of up to level 8.

    • 585. Registration of resolution and supporting documents

      (1) Within 14 days after the resolution for reducing share capital is passed the company must deliver to (in the case of a company other than a restricted scope company) the Registrar or (in the case of a restricted scope company) each of its members-
      (a) a copy of the solvency statement, and
      (b) a statement of capital,
      (c) the copy of the resolution itself that is required to be delivered to the Registrar under Chapter 3 of Part 3.
      (2) The statement of capital must state with respect to the company’s share capital as reduced by the resolution-
      (a) the total number of shares of the company,
      (b) the aggregate issue price of those shares,
      (c) for each class of shares-
      (i) prescribed particulars of the rights attached to the shares,
      (ii) the total number of shares of that class, and
      (iii) the aggregate issue price of shares of that class, and
      (d) the amount paid up and the amount (if any) unpaid on each share.
      (3) The Registrar must register the documents delivered to him under subsection (1) on receipt.
      (4) The resolution does not take effect until those documents are registered.
      (5) The company must also deliver to the Registrar, within 14 days after the resolution is passed, a statement by the directors confirming that the solvency statement was-
      (a) made not more than 15 days before the date on which the resolution was passed, and
      (b) provided to members in accordance with section 583(2) or (3).
      (6) The validity of a resolution is not affected by-
      (a) a failure to deliver the documents required to be delivered to the Registrar under subsection (1) within the time specified in that subsection, or
      (b) a failure to comply with subsection (5).
      (7) If the company delivers to the Registrar a solvency statement that was not provided to members in accordance with section 583(2) or (3), a contravention of these Regulations is committed by every officer of the company who is in default.
      (8) If default is made in complying with this section, a contravention of these Regulations is committed by-
      (a) the company, and
      (b) every officer of the company who is in default.
      (9) A person who commits a contravention of subsection (7) or (8) is liable to a fine of up to level 5.