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Companies Act 2006

Changes over time for: Cross Heading: Private companies: reduction of capital supported by solvency statement

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Companies Act 2006, Cross Heading: Private companies: reduction of capital supported by solvency statement is up to date with all changes known to be in force on or before 26 February 2024. There are changes that may be brought into force at a future date. Changes that have been made appear in the content and are referenced with annotations. Help about Changes to Legislation

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Private companies: reduction of capital supported by solvency statementU.K.

Valid from 01/10/2008

642Reduction of capital supported by solvency statementU.K.

(1)A resolution for reducing share capital of a private company limited by shares is supported by a solvency statement if—

(a)the directors of the company make a statement of the solvency of the company in accordance with section 643 (a “solvency statement”) not more than 15 days before the date on which the resolution is passed, and

(b)the resolution and solvency statement are registered in accordance with section 644.

(2)Where the resolution is proposed as a written resolution, a copy of the solvency statement must be sent or submitted to every eligible member at or before the time at which the proposed resolution is sent or submitted to him.

(3)Where the resolution is proposed at a general meeting, a copy of the solvency statement must be made available for inspection by members of the company throughout that meeting.

(4)The validity of a resolution is not affected by a failure to comply with subsection (2) or (3).

643Solvency statementU.K.

(1)A solvency statement is a statement that each of the directors—

(a)has formed the opinion, as regards the company's situation at the date of the statement, that there is no ground on which the company could then be found to be unable to pay (or otherwise discharge) its debts; and

(b)has also formed the opinion—

(i)if it is intended to commence the winding up of the company within twelve months of that date, that the company will be able to pay (or otherwise discharge) its debts in full within twelve months of the commencement of the winding up; or

(ii)in any other case, that the company will be able to pay (or otherwise discharge) its debts as they fall due during the year immediately following that date.

(2)In forming those opinions, the directors must take into account all of the company's liabilities (including any contingent or prospective liabilities).

(3)The solvency statement must be in the prescribed form and must state—

(a)the date on which it is made, and

(b)the name of each director of the company.

(4)If the directors make a solvency statement without having reasonable grounds for the opinions expressed in it, and the statement is delivered to the registrar, an offence is committed by every director who is in default.

(5)A person guilty of an offence under subsection (4) is liable—

(a)on conviction on indictment, to imprisonment for a term not exceeding two years or a fine (or both);

(b)on summary conviction—

(i)in England and Wales, to imprisonment for a term not exceeding twelve months or to a fine not exceeding the statutory maximum (or both);

(ii)in Scotland or Northern Ireland, to imprisonment for a term not exceeding six months, or to a fine not exceeding the statutory maximum (or both).

Commencement Information

I1S. 643 wholly in force at 1.1.2008; s. 643 not in force at Royal Assent, see s. 1300; s. 643 in force for specified purposes at 20.1.2007 by S.I. 2006/3428, art. 3(3) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5); s. 643 in force at 1.10.2008 in so far as not already in force by S.I. 2008/1886, art. 2 (with arts. 6, 7)

644Registration of resolution and supporting documentsU.K.

(1)Within 15 days after the resolution for reducing share capital is passed the company must deliver to the registrar—

(a)a copy of the solvency statement, and

(b)a statement of capital.

This is in addition to the copy of the resolution itself that is required to be delivered to the registrar under Chapter 3 of Part 3.

(2)The statement of capital must state with respect to the company's share capital as reduced by the resolution—

(a)the total number of shares of the company,

(b)the aggregate nominal value of those shares,

(c)for each class of shares—

(i)prescribed particulars of the rights attached to the shares,

(ii)the total number of shares of that class, and

(iii)the aggregate nominal value of shares of that class, and

(d)the amount paid up and the amount (if any) unpaid on each share (whether on account of the nominal value of the share or by way of premium).

(3)The registrar must register the documents delivered to him under subsection (1) on receipt.

(4)The resolution does not take effect until those documents are registered.

(5)The company must also deliver to the registrar, within 15 days after the resolution is passed, a statement by the directors confirming that the solvency statement was—

(a)made not more than 15 days before the date on which the resolution was passed, and

(b)provided to members in accordance with section 642(2) or (3).

(6)The validity of a resolution is not affected by—

(a)a failure to deliver the documents required to be delivered to the registrar under subsection (1) within the time specified in that subsection, or

(b)a failure to comply with subsection (5).

(7)If the company delivers to the registrar a solvency statement that was not provided to members in accordance with section 642(2) or (3), an offence is committed by every officer of the company who is in default.

(8)If default is made in complying with this section, an offence is committed by—

(a)the company, and

(b)every officer of the company who is in default.

(9)A person guilty of an offence under subsection (7) or (8) is liable—

(a)on conviction on indictment, to a fine;

(b)on summary conviction, to a fine not exceeding the statutory maximum.

Modifications etc. (not altering text)

Commencement Information

I2S. 644 wholly in force at 1.10.2008; s. 644 not in force at Royal Assent, see s. 1300; s. 644 in force for specified purposes at 20.1.2007 by S.I. 2006/3428, art. 3(3) (subject to art. 5, Sch. 1 and with arts. 6, 8, Sch. 5); s. 644 in force at 1.10.2008 in so far as not already in force by S.I. 2008/1886, art. 2 (with arts. 6, 7)

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