Insolvency Act 1986, section 89

Statutory declaration of solvency

Part IV Winding Up of Companies Registered under the Companies Acts

(1)Where it is proposed to wind up a company voluntarily, the directors (or, in the case of a company having more than two directors, the majority of them) may at a directors’ meeting make a statutory declaration to the effect that they have made a full inquiry into the company’s affairs and that, having done so, they have formed the opinion that the company will be able to pay its debts in full, together with interest at the official rate (as defined in section 251), within such period, not exceeding 12 months from the commencement of the winding up, as may be specified in the declaration.

(2)Such a declaration by the directors has no effect for purposes of this Act unless—

(a)it is made within the 5 weeks immediately preceding the date of the passing of the resolution for winding up, or on that date but before the passing of the resolution, and

(b)it embodies a statement of the company’s assets and liabilities as at the latest practicable date before the making of the declaration.

(3)[F217 A copy of the declarationF217] shall be delivered to the registrar of companies before the expiration of 15 days immediately following the date on which the resolution for winding up is passed.

(4)A director making a declaration under this section without having reasonable grounds for the opinion that the company will be able to pay its debts in full, together with interest at the official rate, within the period specified is liable to imprisonment or a fine, or both.

(5)If the company is wound up in pursuance of a resolution passed within 5 weeks after the making of the declaration, and its debts (together with interest at the official rate) are not paid or provided for in full within the period specified, it is to be presumed (unless the contrary is shown) that the director did not have reasonable grounds for his opinion.

(6)If [F218a copy ofF218] a declaration required by subsection (3) to be delivered to the registrar is not so delivered within the time prescribed by that subsection, the company and every officer in default is liable to a fine and, for continued contravention, to a daily default fine.

Definitions used in section 89 1

the company

2 Section 233B does not apply in relation to a contract for the supply of goods or services to a company (“the company”) where any of paragraphs 3 to 11 applies.

Defined in Sch.4ZZA para.2 · see it in the full Act

Cases considering section 89 12

Greenbank Technology Limited (In Liquidation), Re

[2026] EWHC 1466 (Ch) · 16 June 2026Interprets

The court held that the declaration of solvency required by section 89 must be made before a suitably qualified person. That requirement is fundamental, and failure to comply means the winding up is a creditors’ voluntary liquidation rather than a members’ voluntary liquidation. (see paras [35]-[41]) Section 89(1) requires the directors to make a statutory declaration of solvency after full inquiry into the company’s affairs. The court treated the declaration as a serious statutory act requiring compliance with the prescribed formality of being made before a suitably qualified person. (see paras [35]-[39]) Section 89(4)’s criminal sanction reinforced the court’s conclusion that the declaration of solvency is a serious and fundamental statutory requirement. (see para [36]) Section 89(5)’s statutory presumption was relied on as further evidence of the seriousness of the declaration and the consequences of making it without reasonable grounds. (see para [36]) Cited only.

Noal SCSp & Ors v Novalpina Capital LLP & Ors

[2025] EWHC 1392 (Ch) · 6 June 2025Limits

Interpreted as requiring directors to form the opinion that all company debts, with interest, can be paid in full within the specified period not exceeding 12 months. The provision does not impose a balance-sheet insolvency test. (see paras [46]-[55]) Applied as the source of the specific payment-in-time test for a members’ voluntary liquidation. Debts must be capable of payment in full with interest during the declared period. (see paras [46]-[55]) Confirmed as demonstrating the seriousness of the declaration and the need for a full inquiry into the company’s affairs. (see paras [46], [48]) Limited to the statutory presumption concerning the criminal sanction where a liquidation occurs within five weeks. Its reference to debts being paid or provided for does not modify the tests in sections 89(1) and 95. (see paras [48]-[50])

Davidison v Finnan & Ors

[2020] EWHC 1607 (Ch) · 24 June 2020Limits

Uses the members’ voluntary liquidation solvency declaration as an analogy for the reasonable enquiry required before a member exits and is paid out. The court declined to apply the full requirement to establish ability to pay debts in full because no improper informal winding up was alleged (see paras [44]-[46]). Confirms that the statutory analogy includes drawing up the relevant statement within the specified period before the winding-up resolution. It informs the timing of reasonable enquiry but does not itself determine the summary judgment outcome (see para [45]). Confirms that a statement of assets and liabilities is part of the statutory solvency declaration framework. The judgment used that framework to illuminate the need to investigate and provide for contingent liabilities before a member’s exit (see para [45]).

What each judgment says about section 89 is in the case-law panel in the full Act.

Amendments and notes

3 notes from legislation.gov.uk

Amendments

  1. F217Words in s. 89(3) substituted (26.10.2023 for specified purposes, 4.3.2024 in so far as not already in force) by Economic Crime and Corporate Transparency Act 2023 (c. 56), ss. 77(1)(a), 219(1)(2)(b); S.I. 2024/269, reg. 2(z19)
  2. F218Words in s. 89(6) inserted (26.10.2023 for specified purposes, 4.3.2024 in so far as not already in force) by Economic Crime and Corporate Transparency Act 2023 (c. 56), ss. 77(1)(b), 219(1)(2)(b); S.I. 2024/269, reg. 2(z19)

Modifications

  1. C274S. 89(3) amended (1.7.1999) by 1998 c. 46, s. 125, Sch. 8 para. 23(5) (with s. 126(3)-(11)); S.I. 1998/3178, arts. 2, 3 (as amended (28.6.2016) by The Building Societies (Floating Charges and Other Provisions) Order 2016 (S.I. 2016/679), arts. 1(1), 6)