Solvency Statement : Its significance and concerns

Solvency Statement : Its significance and concerns






Solvency Test - Its Significance and Concerns
View this email in your browser

Solvency Test

Created to safeguard interest of stakeholders.
There are various concerns to its implementation. Read on to discover more. 
New Companies Act 2016 started its operation on 31 January 2017.  It aims to balance the need to make it easier for companies to do business, while safeguarding the interest of stakeholders.
[If you miss out on the write up on the changes introduced by CA 2016, click here to read more].  

The introduction of "
Solvency Statement" is one of such safeguard mechanisms. Yet many directors are still unaware what "Solvency Statement" is and the protection that needs to be in place. Many directors remain ignorant of the risk of being fined or imprisonment in connection with signing off a solvency statements. 
 

Solvency Test is essentially a statement  made in writing by all the directors, which declares that : 
  • there are no grounds on which the company could be found to be unable to pay or otherwise discharge its debts; and 
  • the company will be able to pay its debts as they fall due during the 12 months immediately following the date of the statement, or, 
  • if it is intended to commence the winding up of the company within 12 months of the date of the statement, that the company will be able to pay or discharge its debts in full within 12 months of the commencement of the winding up.    


The statement is required when undertaking the following financial activities :
  • Declaring dividends to shareholders;
  • Capital Reduction (where there is no court order);
  • Financial assistance;
  • Redemption of preference shares; or
  • Share buyback
The lingering questions on Solvency Statement

While conducting the Company Law 2016 seminar for the past 1 year (5 sessions in total), it is an honor to have welcomed attendees from distinct backgrounds. These allow us to see many unique angles on the implementation concerning the solvency statement.

The attendees range from Public Listed,  Professional Firms, Small and Medium Companies, to Government Agencies and Regulatory Bodies.

The following are those concerns highlighted by the attendees which we feel that you should take into consideration in the preparation of Solvency Statement:
  1. What protection can creditors derived from Solvency Statement ?
  2. From the time when the Solvency Statement is prepared until the time when the dividend is paid. What is the allowable time frame?
  3. To what extent the director is taking the risk and what protection is made available to them as to shield from the burden of personal liability?
  4. Can directors create the statement based on advice from professionals or employees? Will this form a valid and strong defence in the event of non-compliance.
  5. Does the statement need validation by professionals? What are the secretarial procedures involved? What safeguarding mechanisms are available to the professionals from professional indemnity.
  6. Solvency statement is created based on estimation and projection of future financial events. What should directors do if there is a change in circumstances?
  7. What should directors do to protect themselves against the change in circumstances of the financial events?
  8. What are the documentations needed for the director to discharge its duty and liability?
Having similar concerns?

Do seek advice from your consultant or attend Company Law 2016 Seminar organised by us on 8th May 2017 or other organiser.

[ A SAMPLE copy of the
Solvency Test Template will be provided when you attend the seminar on 8th May 2017. ]

Do share with those who may enjoy this.

 

With  Regards,
 
Janet Jang
Market Educator
t: 016-302 6109 (Janet) / 019 311 0625 (Janet) / 016-328 6312 (Lau)
a. Synergy TAS PLT,  Suite 153, PG-15A, Ground Floor, Jaya 33, No. 3, Jalan Semangat, Section 13, 46100 Petaling Jaya, Selangor.


E-MAIL DISCLAIMER: This e-mail, including its contents and attachments, if any, are confidential.  If you are not the named recipient, please notify the sender and immediately delete the Message from your system.  Any unauthorised disseminator, distributor, or forward on this e-mail message or disclose its contents to anybody else  is strictly forbidden.  Copyright and any other intellectual property rights in its contents are the sole property of Synergy TAS PLT.  E-mail transmission cannot be guaranteed to be secure or error-free.
The sender therefore does not accept liability for any errors or omissions in the contents of this message, which arise as a result of e-mail transmission.  We make no representation or warranty as to the absence of viruses in this e-mail or any attachments.

Upcoming events

COMPANY LAW 2016 : Total Revamp With Huge Tax Planning Opportunities
Next Session on 8 May 2017 in The Gardens, Mid Valley, KL.
Click here to Register NOW
Welcome to come back for review session.
Share this amazing Company Law 2016 session with your fellow colleagues or those who you think will benefit them.
Very Limited seats are still available.

Also Upcoming Events

BUDGET 2018 : INCOME TAX | RPGT | GST 
Latest Updates and Tax Planning (2 & 3 November 2017 in The Gardens, Mid Valley, KL)

Open for Very Early Bird Discount. Click here to register NOW. 
EXCITING TAX PLANNING AND LATEST UPDATES AWAITS YOU 
2017 is a year of excitement with general election expected to be coming up. The upcoming BUDGET 2018 is full of excitement. In addition with the recent high publicity on the hike in penalty by IRB and coming into force of various new rules and guidelines on GST.

As usual this year's Budget seminar will also encompasses the various Tax Updates and Latest Tax Planning on the Trio of Taxation (Income Tax, RPGT, and GST), it will take 2 days for us to complete all the contents.

We look forward to seeing you !

Register NOW to take advantage of the VERY EARLY BIRD Discount of up to RM 900 (or RM1,200 for those who sign up in group of 5 or more).

P.S. Register early to secure a seat !
P.P.S Please share with those you care about.
Click to Register BUDGET 2018 NOW
The most sought after event of the year "Budget 2018" is open for registration now for Very Early Bird discount.

Register early to secure your seats.
DISCLAIMER OF WARRANTIES AND LIMITATION OF LIABILITY. Click here to read full.
Copyright © 2017 Synergy TAS PLT, All rights reserved.

Enrolled to get the latest event organised by Synergy TAS PLT

Our Contact is:
+6016 302 6109 (Janet), +6016 328 6312 (Lau) 


Our mailing address is:
Synergy TAS PLT
Suite 153, PG-15A, Ground Floor, Jaya 33,
No. 3, Jalan Semangat, Section 13,
Petaling Jaya, Selangor 46100
Malaysia







Popular Posts