THE CORPORATIONS LAW

CHAPTER 5 - EXTERNAL ADMINISTRATION

PART 5.5 - VOLUNTARY WINDING UP

Division 1 - Resolution for winding up

SECTION 494   DECLARATION OF SOLVENCY  

494(1)  [Declaration by majority of directors]  

Where it is proposed to wind up a company voluntarily, a majority of the directors may, before the date on which the notices of the meeting at which the resolution for the winding up of the company is to be proposed are sent out, make a written declaration to the effect that they have made an inquiry into the affairs of the company and that, at a meeting of directors, they have formed the opinion that the company will be able to pay its debts in full within a period not exceeding 12 months after the commencement of the winding up.

494(2)  [Statement of affairs]  

There shall be attached to the declaration a statement of affairs of the company showing, in the prescribed form:

(a)  the property of the company, and the total amount expected to be realised from that property;

(b)  the liabilities of the company; and

(c)  the estimated expenses of winding up;

made up to the latest practicable date before the making of the declaration.

494(3)  [Requirements as to declaration]  

A declaration so made has no effect for the purposes of this Law unless:

(a)  the declaration is made at the meeting of directors referred to in subsection (1);

(b)  the declaration is lodged before the date on which the notices of the meeting at which the resolution for the winding up of the company is to be proposed are sent out or such later date as the Commission, whether before, on or after the first-mentioned date, allows; and

(c)  the resolution for voluntary winding up is passed within the period of 5 weeks after the making of the declaration or within such further period after the making of that declaration as the Commission, whether before or after the end of that period of 5 weeks, allows.

494(4)  [Offence]  

A director who makes a declaration under this section (including a declaration that has no effect for the purposes of this Law by reason of subsection (3)) without having reasonable grounds for his or her opinion that the company will be able to pay its debts in full within the period stated in the declaration is guilty of an offence.

494(5)  [Presumption against director]  

If the company is wound up pursuant to a resolution for voluntary winding up passed within the period of 5 weeks after the making of the declaration or, if pursuant to paragraph (3)(c) the Commission has allowed a further period after the end of that period of 5 weeks, within that further period, but its debts are not paid or provided for in full within the period stated in the declaration, it shall be presumed, unless the contrary is shown, that a director who made the declaration did not have reasonable grounds for his or her opinion.