Section 77 — Companies Act 1993: Company must satisfy solvency test

77 Company must satisfy solvency test (1) A company must not give any financial assistance under section 76 of this Act unless the board of the company is satisfied on reasonable grounds that the company will, immediately after the giving of the financial assistance, satisfy the solvency test. (2) The directors who vote in favour of the giving of the financial assistance must sign a certificate stating that, in their opinion, the company will, immediately after the financial assistance is given, satisfy the solvency test and the grounds for that opinion. (3) If, after a resolution is passed under subsection (1) of this section and before the financial assistance is given, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the financial assistance is given, satisfy the solvency test, any financial assistance given by the company is deemed not to have been authorised. (4) Every director of a company who fails to comply with subsection (2) of this section commits an offence and is liable to the penalty set out in section 373(1) of this Act. (5) The provisions of section 56 of this Act apply in relation to the giving of financial assistance by a company with such modifications as may be necessary. (6) In applying the solvency test for the purposes of this section,— Assets excludes amounts of financial assistance given by the company at any time under section 76 or section 107(1)(e) of this Act in the form of loans; and Subsection (6) assets: this term was amended, as from 15 April 2004, by section 5(a) Companies Amendment Act (No 2) 2004 (2004 No 24) by inserting the words “ or section 107(1)(e) ” after the expression “ section 76 ” . Liabilities includes the face value of all outstanding liabilities, whether contingent or otherwise, incurred by the company at any time in connection with the giving of financial assistance under section 76 or section 107(1)(e) of this Act. Subsection (6) liabilities: this term was amended, as from 15 April 2004, by section 5(b) Companies Amendment Act (No 2) 2004 (2004 No 24) by inserting the words “ or section 107(1)(e) ” after the expression “ section 76 ” . (7) Nothing in subsection (6) of this section limits or affects the application of section 4(4) of this Act. Subsection (6) was substituted, as from 1 July 1994, by section 12 Companies Act 1993 Amendment Act 1994 (1994 No 6). Subsection (7) was inserted, as from 1 July 1994, by section 12 Companies Act 1993 Amendment Act 1994 (1994 No 6).