Distributions to shareholders
A company may authorise a distribution to shareholders at any time and of any amount.
Before doing so it must:
- be satisfied on reasonable grounds that the company will be able to satisfy the solvency test immediately after the distribution; and
- ensure that it does not breach section 53 of the Companies Act 1993 or any provision in its constitution relating to distributions.
Directors who approve a distribution must sign a certificate stating that the company will satisfy the solvency test and give the grounds for their opinion. A company satisfies the solvency test if:
- it is able to pay its debts as they become due in the normal course of business; and
- the value of its assets is greater than the value of its liabilities including contingent liabilities.
![[link to business.govt.nz website].](http://www.business.govt.nz/companies/images/portlet-images/business-govt-nz-webtile.jpg "[link to business.govt.nz website].")
