New Companies Act 2016 started its operation on 31 January 2017. It aims to balance the need to make it easier for companies to do business, while safeguarding the interest of stakeholders.
[If you miss out on the write up on the changes introduced by CA 2016, click here to read more].
The introduction of "Solvency Statement" is one of such safeguard mechanisms. Yet many directors are still unaware what "Solvency Statement" is and the protection that needs to be in place. Many directors remain ignorant of the risk of being fined or imprisonment in connection with signing off a solvency statements.
Solvency Test is essentially a statement made in writing by all the directors, which declares that :
The statement is required when undertaking the following financial activities :
While conducting the Company Law 2016 seminar for the past 1 year (5 sessions in total), it is an honor to have welcomed attendees from distinct backgrounds. These allow us to see many unique angles on the implementation concerning the solvency statement.
The attendees range from Public Listed, Professional Firms, Small and Medium Companies, to Government Agencies and Regulatory Bodies.
The following are those concerns highlighted by the attendees which we feel that you should take into consideration in the preparation of Solvency Statement: