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107: Unanimous assent to certain types of action
or “Company actions allowed when all decision-makers agree”
You could also call this:

“Company must ensure it can pay its debts before using certain powers”

When a company wants to use certain powers, it must first make sure it can pay its debts. The board of directors needs to be confident that the company will still be able to pay its debts after using these powers.

The directors who agree to use the power must write and sign a statement. This statement says that they believe the company will still be able to pay its debts after using the power.

If the directors change their minds and no longer think the company can pay its debts, they can’t use the power anymore.

There are special rules about how to check if a company can pay its debts when it’s giving financial help. These rules say you can’t count loans the company has given as assets. You also have to count all the money the company might owe because of giving financial help as debts.

If a director doesn’t sign the statement when they should, they’re breaking the law. They could be punished for this.

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Next up: 109: Management review by shareholders

or “Shareholders can discuss and vote on company management at meetings”
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Part 7 Shareholders and their rights and obligations
Powers of shareholders

108Company to satisfy solvency test

  1. A power referred to in subsection (1) of section 107 must not be exercised unless the board of the company is satisfied on reasonable grounds that the company will, immediately after the exercise of the power, satisfy the solvency test.

  2. The directors who vote in favour of the exercise of the power must sign a certificate stating that, in their opinion, the company will, after the exercise of the power, satisfy the solvency test.

  3. If, after a resolution is passed under subsection (1) and before the power is exercised, the board ceases to be satisfied on reasonable grounds that the company will, immediately after the power is exercised, satisfy the solvency test, any exercise of the power is deemed not to have been authorised.

  4. The provisions of section 56 apply in relation to the exercise of a power referred to in subsection (1) of section 107, with such modifications as may be necessary.

  5. In applying the solvency test for the purposes of section 107(1)(e),—

  6. assets excludes all amounts of financial assistance given by the company at any time under section 76 or section 107(1)(e) in the form of loans; and
    1. liabilities includes the face value of all outstanding liabilities, whether contingent or otherwise, incurred by the company at any time in connection with the giving of financial assistance under section 76 or section 107(1)(e).

      1. Nothing in subsection (5) limits or affects the application of section 4(4).

      2. Every director who fails to comply with subsection (2) commits an offence and is liable on conviction to the penalty set out in section 373(1).

      Notes
      • Section 108(5)(a): amended, on , by section 6(1) of the Companies Amendment Act (No 2) 2004 (2004 No 24).
      • Section 108(5)(b): amended, on , by section 6(2) of the Companies Amendment Act (No 2) 2004 (2004 No 24).
      • Section 108(5A): inserted, on , by section 7 of the Companies Act 1993 Amendment Act 1997 (1997 No 27).