Solvency Resolution

A Solvency Resolution is a declaration made by a company’s directors that the company is able or unable to pay their debts as they fall due.

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Last updated October 16, 2024

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Suitable for Australia

Solvency Resolution

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What is a solvency resolution?

A solvency resolution is a formal declaration by a company’s directors stating whether they believe the company can pay its debts as they fall due.
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When should you use a solvency resolution?

You should use a solvency resolution when directors need to confirm the company’s ability to pay its debts, typically within two months of the annual review date as required by the Corporations Act 2001.
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What should be in a solvency resolution?

A solvency resolution should include a clear statement about the company’s solvency status, signatures from all relevant directors, and confirmation that the directors agree with the declaration.
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Frequently asked questions

Who is required to sign the solvency resolution?

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What happens if the directors do not pass a solvency resolution?

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Can a company’s constitution override the standard process?

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Is this resolution suitable for all types of companies?

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What are the legal obligations after passing a solvency resolution?

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What if directors disagree about the company’s solvency?

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Does this resolution protect directors from liability?

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Solvency Resolution

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