56Recovery of distributions

1. 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—

2. the shareholder received the distribution in good faith and without knowledge of the company's failure to satisfy the solvency test; and
3. the shareholder has altered the shareholder's position in reliance on the validity of the distribution; and
4. it would be unfair to require repayment in full or at all.

5. If, in relation to a distribution made to shareholders,—

6. the procedure set out in section 52 or section 70 or section 77, as the case may be, has not been followed; or
7. reasonable grounds for believing that the company would satisfy the solvency test in accordance with section 52 or section 70 or section 77, as the case may be, did not exist at the time the certificate was signed,—
a director who—
8. failed to take reasonable steps to ensure the procedure was followed; or
9. signed the certificate, as the case may be,—
is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

10. If, by virtue of section 52(3) or section 70(3) or section 77(3), as the case may be, a distribution is deemed not to have been authorised, a director who—

11. ceased after authorisation but before the making of the distribution to be satisfied on reasonable grounds for believing that the company would satisfy the solvency test immediately after the distribution is made; and
12. failed to take reasonable steps to prevent the distribution being made,—
is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

13. If, by virtue of section 55(5), a distribution is deemed not to have been authorised, a director who failed to take reasonable steps to prevent the distribution being made is personally liable to the company to repay to the company so much of the distribution as is not able to be recovered from shareholders.

14. If, in an action brought against a director or 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—

15. permit the shareholder to retain; or
16. relieve the director from liability in respect of—
an amount equal to the value of any distribution that could properly have been made.