Companies Act 2016 introduces the solvency test. The solvency test operates on the basis that a company must ensure that it has sufficient funds to pay its debts to its creditors for the following purposes: (a) Redemption of redeemable preference shares. (b) Purchase by a company of its own shares under the share buyback provision. (c) Reduction of capital. (d) Giving financial assistance. Discuss the relevant provisions of the Companies Act 2016 which govern the solvency test and solvency statement. Please give explanation base on section 112 and 113 and relate to above question (a)(b)(c)(d).
Companies Act 2016 introduces the solvency test. The solvency test operates on the basis that a company must ensure that it has sufficient funds to pay its debts to its creditors for the following purposes: (a) Redemption of redeemable preference shares. (b) Purchase by a company of its own shares under the share buyback provision. (c) Reduction of capital. (d) Giving financial assistance. Discuss the relevant provisions of the Companies Act 2016 which govern the solvency test and solvency statement. Please give explanation base on section 112 and 113 and relate to above question (a)(b)(c)(d).
Related questions
Question
Companies Act 2016 introduces the solvency test. The solvency test operates
on the basis that a company must ensure that it has sufficient funds to pay its
debts to its creditors for the following purposes:
(a) Redemption of redeemable
(b) Purchase by a company of its own shares under the share buyback
provision.
(c) Reduction of capital.
(d) Giving financial assistance.
Discuss the relevant provisions of the Companies Act 2016 which govern the
solvency test and solvency statement.
Please give explanation base on section 112 and 113 and relate to above question (a)(b)(c)(d).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 3 steps
