COMPANIES ACT 1963 – SECT 256 Statutory declaration of solvency in case of proposal to wind up voluntarily.
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.
(2) A declaration made as aforesaid shall have no effect for the purposes of this Act unless—
( a ) it is made within the 28 days immediately preceding the date of the passing of the resolution for winding up the company and is delivered to the registrar of companies for registration before that date; and
( b ) it embodies a statement of the company’s assets and liabilities as at the latest practicable date before the making of the declaration.
(3) 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.
(4) 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 company shall within 21 days after the making of the order, deliver an office copy of such order to the registrar of companies.
(5) If default is made in complying with subsection (4), the company and every officer of the company who is in default shall be liable to a fine not exceeding £25.
(6) Any director of a company making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period specified in the declaration, shall be liable to imprisonment for a period not exceeding 6 months or to a fine not exceeding £100 or to both; and if the company is wound up in pursuance of a resolution passed within the period of 28 days after the making, of the declaration, but its debts are not paid or provided for in full within the period stated in the declaration, it shall be presumed until the contrary is shown that the director did not have reasonable grounds for his opinion.
(7) 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 (3) is in this Act referred to as “a creditors’ voluntary winding up”.
(8) This section shall not apply to a winding up commenced before the operative date.