What is Solvency Statement in Singapore?

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Meaning of Solvency Statement?

When a Solvency Statement is required in Singapore?

Is a Solvency Statement necessary for reduction of share capital?

For a successful non-court approved capital reduction, the following steps need to be carried out:
A shareholders’ special resolution must be passed;
The board of directors makes a solvency statement (if required to do so); and
The company must comply with the publicity requirements.

The solvency statement verifies that the company is presently able to repay its debts in the next 12 months, even if it commences winding up, and that the value of its assets is not less than the value of its liabilities.
The directors must exercise due diligence and properly consider the company’s financial position when preparing the solvency statement. Any director who provides a solvency statement without having adequate justification for the statements expressed in it may be subject to criminal liability.
The solvency statement can be made 20 days before the date of passing of the special resolution for reducing share capital at the earliest.
However, a solvency statement is not required where the reduction of share capital does not involve a reduction or distribution of assets by the company, or a release of any liability owed to the company.

Private Limited Company In Singapore