Commonwealth Numbered Acts

COMPANIES ACT 1981 No. 89 of 1981 - SECT 395

395. (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 2 directors, 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.

(2) 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
        realized 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.

(3) A declaration so made has no effect for the purposes of this Act unless it
is-

   (a)  made at the meeting of directors referred to in sub-section (1);

   (b)  made within 5 weeks immediately preceding the passing of the
        resolution for voluntary winding up or within such further period as
        the Commission, whether before or after the expiration of those 5
        weeks, allows; and

   (c)  lodged with the Commission 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.

(4) A director who makes a declaration under this section (including a
declaration that has no effect for the purposes of this Act by reason of
sub-section (3)) without having reasonable grounds for his 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.

Penalty: $5,000 or imprisonment for one year, or both.

(5) If the company is wound up pursuant to a resolution for voluntary
winding up passed within a period of 5 weeks 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.