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Definition
A solvency statement is a statutory declaration by a company's directors that, in their opinion, the company can pay or otherwise discharge its debts as they fall due, both now and (for a set period) into the future. It's required, for example, to support a capital reduction.
In plain terms
It's the directors putting their names to a promise that the company is and will remain able to pay its way — a serious statement, not a formality.
Why it matters for your company
Giving one without proper grounds carries personal risk, so it demands honest cash forecasting. See going concern and cash flow forecasting.
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