Document background
A Solvency Confirmation Letter is a crucial document in Hong Kong's corporate governance framework, required in various business contexts to provide formal assurance of a company's financial stability and ability to meet its obligations. This document is typically required when companies undertake significant corporate actions such as dividend distributions, share buybacks, corporate restructuring, or major transactions. The letter must comply with Hong Kong's Companies Ordinance and related regulations, confirming both cash flow and balance sheet solvency tests. Directors and authorized signatories must exercise due diligence in preparing this confirmation, as it carries significant legal implications and potential personal liability. The document typically includes detailed financial assessments, directors' statements, and may be supported by financial metrics and professional advisors' input.
