False declarations of solvency
Produced in partnership with Micheal Murphy and Amelia Clegg of 23 Essex Street Chambers
False declarations of solvency

The following Corporate Crime practice note produced in partnership with Micheal Murphy and Amelia Clegg of 23 Essex Street Chambers provides comprehensive and up to date legal information covering:

  • False declarations of solvency
  • Elements of the offence
  • Proposal for voluntary winding up
  • The statutory declaration
  • Reasonable grounds
  • Sentence

Under the Insolvency Act 1986 (IA 1986) it is a criminal offence for a company director to make a statutory declaration of a company's solvency without reasonable grounds.

The offence can be tried in the magistrates' court or the Crown Court.

Elements of the offence

The offence is committed if:

  1. there is a proposal to wind up a company voluntarily and

  2. the directors of a company or the majority of them

  3. make a statutory declaration that a full enquiry into the company affairs has been done

  4. without reasonable grounds that the company can pay its debts and interest within a maximum of 12 months

Proposal for voluntary winding up

A company may be wound up voluntarily:

  1. when the period (if any) fixed for the duration of the company by the articles expires, or the event (if any) occurs, on the occurrence of which the articles provide that the company is to be dissolved, and the company in general meeting has passed a resolution requiring it to be wound up voluntarily

  2. if the company

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