ACT 125
COMPANIES ACT 1965 (REVISED - 1973)
PART X - WINDING UP
DIVISION 3 - VOLUNTARY WINDING UP
Subdivision (1) - Introductory

 
Section 257. Declaration of solvency.
 
Section 257. Declaration of solvency. (COMPANIES ACT 1965 (REVISED - 1973) - ACT 125) (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 two directors, the 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 have formed the opinion that the company will be able to pay its debts in full within a period not exceeding twelve 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 assets of the company, and the total amount expected to be realized therefrom;

    (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 shall have no effect for the purposes of this Act unless it is—

    (a) made at the meeting of directors referred to in subsection (1);

    (b) made within five weeks immediately preceding the passing of the resolution for voluntary winding up; and

    (c) lodged with the Registrar 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.

(4) A director who makes a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full within the period stated in the declaration shall be guilty of an offence against this Act.

Penalty: Imprisonment for three years or ten thousand ringgit or both.

(5) If the company is wound up in pursuance of a resolution for voluntary winding up passed within a period of five 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.