Companies Act 2007 · As enacted · Part IV · Shares and Debentures Prospectus
61. Recovery of distributions
Official English translation. Where it differs from the Sinhala or Tamil text, the Act itself says which text prevails.
Official translationFrom Department of Government Printing, unchanged
A distribution made to a shareholder at a time when the company did not, immediately after the distribution, satisfy the solvency test, may be recovered by the company from the shareholder, unless—
the shareholder received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test;
the shareholder has altered his position in relying on the validity of the distribution; and
it would be unreasonable in view of the circumstances to require repayment in full at all.
Where in relation to a distribution to which subsection (1) applies, the procedure set out in section 56 has not been followed or reasonable grounds for believing that the company would satisfy the solvency test did not exist at the time the certificate was signed, every director who—
failed to take reasonable steps to ensure the procedure was followed; or
signed the certificate, as the case may be, shall be personally liable to the company to repay to the company, so much of the distribution as the company is not able to recover from the shareholders.
Where in an action brought against a director or a shareholder under this section, the court is satisfied that the company could by making a distribution of a lesser amount have satisfied the solvency test, the court may—
permit the shareholder to retain; or
relive the director from liability in respect of, an amount equal to the value of any distribution that could properly have been made.
Part V
Shareholders and Their Rights and Obligations
Part VI
Registration of Charges Registration of Charges with Registrar
Part VII
Management and Administration Registered Office
Part VIII
Amalgamations
Part IX
Compromises with Creditors
Part X
Approval of Arrangements, Amalgamations, and Compromises by Court
Part XI
Provisions Relating to Offshore Companies
Part XII
Winding Up
Part XIII
Administrators Appointment of Administrator
Part XIV
Floating Charges
Part XV
Receivers and Managers
Part XVI
Registrar-General of Companies and Registration Appointment of Officers
Part XVII
Application of Act to Existing Companies
Part XVIII
Overseas Companies
Part XIX
Advisory Commission
Part XX
Companies Disputes Board
Part XXI
Offences Miscellaneous Offences
Part XXII
Miscellaneous Prohibition of Partnership with More Than Twenty Members
Part XXIII