Companies Act 1967 · 2020 Revised Edition · Part 1 · Preliminary
7A. Solvency statement and offence for making false statement
Last amended by an amending law of 2014.
Official textFrom Singapore Statutes Online, unchanged
In this Act, unless the context otherwise requires, “solvency statement”, in relation to a proposed redemption of preference shares by a company out of its capital under section 70, a proposed giving of financial assistance by a company under section 76(9A) or (9B) or a proposed reduction by a company of its share capital under section 78B or 78C, means a statement by the directors of the company that they have formed the opinion —
that, as regards the company’s situation at the date of the statement, there is no ground on which the company could then be found to be unable to pay its debts;
where —
it is intended to commence winding up of the company within the period of 12 months immediately after the date of the statement, that the company will be able to pay its debts in full within the period of 12 months after the date of commencement of the winding up; or
it is not intended so to commence winding up, that the company will be able to pay its debts as they fall due during the period of 12 months immediately after the date of the statement; and
that the value of the company’s assets is not less than the value of its liabilities (including contingent liabilities) and will not, after the proposed redemption, giving of financial assistance or reduction (as the case may be), become less than the value of its liabilities (including contingent liabilities),being a statement which complies with subsection (2).
The solvency statement —
if the company is exempt from audit requirements under section 205B or 205C, must be in the form of a written declaration signed by every director; or
if the company is not such a company, must be in the form of a written declaration signed by every director or must be accompanied by a report from its auditor that the auditor has inquired into the affairs of the company and is of the opinion that the statement is not unreasonable given all the circumstances.
In forming an opinion for the purposes of subsection (1)(a) and (b), the directors of the company must take into account all liabilities of the company (including contingent liabilities).
company
“company” means a company incorporated under this Act or under any corresponding previous written law;
In determining, for the purposes of subsection (1)(c), whether the value of the company’s assets is or will become less than the value of its liabilities (including contingent liabilities) the directors of the company —
must have regard to —
the most recent financial statements of the company that comply with section 201(2) and (5), as the case may be; and
all other circumstances that the directors know or ought to know affect, or may affect, the value of the company’s assets and the value of its liabilities (including contingent liabilities); and
may rely on valuations of assets or estimates of liabilities that are reasonable in the circumstances.
In determining, for the purposes of subsection (4), the value of a contingent liability, the directors of a company may take into account —
the likelihood of the contingency occurring; and
any claim the company is entitled to make and can reasonably expect to be met to reduce or extinguish the contingent liability.
A director of a company who makes a solvency statement without having reasonable grounds for the opinions expressed in it shall be guilty of an offence and shall be liable on conviction to a fine not exceeding $100,000 or to imprisonment for a term not exceeding 3 years or to both.
director
“director” includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors or the majority of the directors of a corporation are accustomed to act and an alternate or substitute director;
Terms defined in this Act
audit requirements
Defined · s 4“audit requirements” means the requirements of sections 201(8) and (9) and 207;
company
Defined · s 4“company” means a company incorporated under this Act or under any corresponding previous written law;
director
Defined · s 4“director” includes any person occupying the position of director of a corporation by whatever name called and includes a person in accordance with whose directions or instructions the directors or the majority of the directors of a corporation are accustomed to act and an alternate or substitute director;
financial statements
Defined · s 209A“financial statements” means the financial statements of a company required to be prepared by the Accounting Standards;
share
Defined · s 4“share” means share in the share capital of a corporation and includes stock except where a distinction between stocks and shares is expressed or implied;
Part 2
Administration of This Act
Part 3
Constitution of Companies
Part 4
Shares, Debentures and Charges
Part 5
Management and Administration
Part 6
Financial Statements and Audit
Part 7
Arrangements, Reconstructions and Amalgamations
Part 8
Part 8A
Part 9
Investigations
Part 10
Dissolution
Part 10A
Transfer of Registration
Part 11
Various Types of Companies, Etc.
Part 11A
Register of Controllers, Nominee Directors and Nominee Shareholders of Companies
Part 12