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Statutory declaration of solvency in case of proposal to wind up voluntarily.
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128.—The Principal Act is hereby amended by the substitution for section 256 of the following section—
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“256.—(1) Where it is proposed to wind up a company voluntarily, the directors of the company or, in the case of a company having more than two directors, the majority of the directors may, at a meeting of the directors, make a statutory declaration to the effect that they have made a full inquiry into the affairs of the company, and that having done so, they have formed the opinion that the company will be able to pay its debts in full within such period not exceeding 12 months from the commencement of the winding up as may be specified in the declaration.
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(2) A declaration made as aforesaid shall have no effect for the purposes of this Act unless—
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(a) it is made within the 28 days immediately preceding the date of the passing of the resolution for winding up the company and delivered to the registrar of companies not later than the date of the delivery to the registrar, in accordance with the provisions of section 143, of a copy of the resolution for winding up the company;
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(b) it embodies a statement of the company's assets and liabilities as at the latest practicable date before the making of the declaration and in any event at a date not more than three months before the making of the declaration;
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(c) a report made by an independent person in accordance with the provisions of this section is attached thereto;
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(d) it embodies a statement by the independent person referred to in paragraph (c) that he has given and has not withdrawn his written consent to the issue of the declaration with the report attached thereto; and
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(e) a copy of the declaration is attached to the notice issued by the company of the general meeting at which it is intended to propose a resolution for voluntary winding up under paragraph (a) or (b) of section 251 (1).
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(3) The report referred to in paragraph (c) of subsection (2) shall be made by an independent person, that is to say, a person qualified at the time of the report to be appointed, or to continue to be, auditor of the company.
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(4) The report shall state whether, in his opinion and to the best of his information and according to the explanations given to him—
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(a) the opinion of the directors referred to in subsection (1), and
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(b) the statement of the company's assets and liabilities embodied in the said declaration,
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are reasonable.
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(5) If within 28 days after the resolution for voluntary winding up has been advertised under subsection (1) of section 252, a creditor applies to the court for an order under this subsection, and the court is satisfied that such creditor together with any creditors supporting him in his application represents one-fifth at least in number or value of the creditors of the company, and the court is of opinion that it is unlikely that the company will be able to pay its debts within the period specified in the declaration, the court may order that all the provisions of this Act relating to a creditors' voluntary winding up shall apply to the winding up.
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(6) If the court orders that all the provisions of this Act in relation to a creditors' voluntary winding up shall apply to the winding up, the person who held the office of liquidator immediately prior to the making of the order or, if no liquidator is acting, the company shall within 21 days after the making of the order, deliver an office copy of such order to the registrar of companies.
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(7) If default is made in complying with subsection (6), any person who is in default shall be liable to a fine not exceeding £1,000.
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(8) Where a statutory declaration is made under this section and it is subsequently proved to the satisfaction of the court that the company is unable to pay its debts, the court on the application of the liquidator or any creditor or contributory of the company may, if it thinks it proper to do so, declare that any director who was a party to the declaration without having reasonable grounds for the opinion that the company would be able to pay its debts in full within the period specified in the declaration shall be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the company as the court may direct.
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(9) Where a company's debts are not paid or provided for in full within the period stated in the declaration of solvency, it shall for the purposes of subsection (8) be presumed, until the contrary is shown, that the director did not have reasonable grounds for his opinion.
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(10) Where the court makes a declaration under subsection (8), it may give such further directions as it thinks proper for the purpose of giving effect to that declaration.
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(11) A winding up in the case of which a declaration has been made and delivered in accordance with this section is in this Act referred to as ‘a members’ voluntary winding up' and a voluntary winding up in the case of which a declaration has not been made and delivered as aforesaid or in the case of which an order is made under subsection (5) or in the case to which section 261 (3) applies is in this Act referred to as ‘a creditors’ voluntary winding up'.”.
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Provisions applicable to a Members' Voluntary Winding Up
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