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Incorporated Societies Act 2022

Removal from register, amalgamation, liquidation, and other processes - Amalgamations

195: Solvency test for amalgamations

You could also call this:

"A society must have enough assets to pay its debts when it merges with another society."

Illustration for Incorporated Societies Act 2022

You need to check if a society can pay its debts on time. The society must have more assets than liabilities. This is called the solvency test. You also need to consider what Section 4(3) and (4) of the Companies Act 1993 says. It applies to societies, not just companies. It talks about officers, not just directors. When a society amalgamates, it must pass the solvency test, as stated in section 194. This means the society is able to pay its debts and has more assets than liabilities. The society's officers must consider this when making decisions.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS258058.

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"Agreeing to Join Two or More Societies Together"

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Part 5Removal from register, amalgamation, liquidation, and other processes
Amalgamations

195Solvency test for amalgamations

  1. For the purposes of section 194, a society satisfies the solvency test if—

  2. the society is able to pay its debts as they become due in the normal course of its operations; and
    1. the value of the society’s assets is greater than the value of its liabilities, including contingent liabilities.

      1. Section 4(3) and (4) of the Companies Act 1993 applies with all necessary modifications as if references to a company were references to a society and references to directors were references to officers.