Section 275 - Affidavit of solvency

(1) Where it is proposed to wind up a company by way of a private liquidation, the directors of the company or, in the case of a company having more than two directors, the majority of the directors shall, at a meeting of the directors, make an affidavit to the effect that they have made a full enquiry 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 and liabilities in full within a period of not more than twelve months from the commencement of the winding up that may be specified in the affidavit.

(2) An affidavit made under subsection (1) does not have effect for the purposes of this Act unless,

(a) it is made within five weeks immediately preceding the date of the passage of the resolution for the winding up of the company by way of private liquidation and is delivered to the Registrar for registration on or before that date; and

(b) it embodies a statement of the assets and liabilities of the company at the latest practicable date before the making of the affidavit.

(3) A director of a company who makes an affidavit under this section without having reasonable grounds for the opinion that the company will be able to pay its debts and liabilities in full within the period specified in the affidavit, commits an offence and is liable on summary conviction to a fine of not less than three hundred and twenty-five penalty units and not more than seven hundred and fifty penalty units or to a term of imprisonment of not less than six months and not more than one year or to both the imprisonment and the fine.

(4) Where the company is wound up in pursuance of the resolution for the winding up of the company by way of private liquidation passed within the period of five weeks after the making of the affidavit, but the debts and liabilities of the company are not paid or provided for in full within the period stated in the affidavit, it shall be presumed, until the contrary is proven, that the director did not have reasonable ground for the opinion stated in the affidavit.