The directors' declaration of solvency in Hong Kong

Declaration of Solvency for Hong Kong MVL

A declaration of solvency is a sworn statement by the company's directors confirming the company can pay its debts in full within a specified period. It is the mandatory prerequisite for initiating a members' voluntary liquidation (MVL) under the Companies Ordinance (Cap. 622). Directors must make this statutory declaration before the winding up can proceed, as it forms the legal basis for treating the liquidation as solvent rather than insolvent.

Declaration of Solvency Hong Kong

The Companies Ordinance sets out the declaration of solvency hong kong requirement. Directors must state they have made a full inquiry into the company's affairs and, after doing so, believe the company will be able to pay its liabilities in full within a period not exceeding 12 months from the commencement of the winding up. Deliver the declaration to the Companies Registry together with the notice of the resolution to wind up.

Solvency Declaration MVL HK

The solvency declaration mvl hk distinguishes a members' voluntary liquidation from a creditors' voluntary liquidation. If directors cannot make this declaration, the company must proceed by way of creditors' voluntary liquidation instead. This alternative gives creditors control over the appointment of the liquidator.

Directors Declaration of Solvency

A majority of directors must make the directors declaration of solvency, or all directors if the company has only two. Each director making the declaration must swear it before a person authorised to administer oaths, such as a solicitor or a commissioner for oaths. The declaration must be accompanied by a statement of affairs showing the company's assets, liabilities and debts.

MVL Solvency Statement Hong Kong

In practice, the mvl solvency statement hong kong is sometimes called the solvency statement, though the statutory term is declaration of solvency. Make the statement within the five weeks immediately preceding the passing of the resolution for winding up, or on the date of the resolution but before it is passed.

Solvent Liquidation Declaration

The solvent liquidation declaration is the directors' formal assurance to creditors and the Companies Registry that the company is genuinely solvent. The liquidator appointed in the MVL relies on this declaration to proceed with distributing assets and settling debts without calling a meeting of creditors. If directors make the declaration without reasonable grounds, they may be personally liable for the company's debts.