Solvency Certificate Template NZ: When You Need One And How To Prepare It

If you run a company, there’ll be times when someone asks you to confirm the company is solvent. That’s where a solvency certificate can help.

And if you’ve been looking for a practical solvency certificate template in NZ, you’re not alone. Many business owners want something they can use as a starting point - without getting buried in legal jargon.

In this guide, we’ll walk you through what a solvency certificate is in New Zealand, when you might need one (including when it’s legally required versus simply requested), what it should include, and the common mistakes to avoid so you can protect your business (and your directors) from day one.

What Is A Solvency Certificate In New Zealand?

A solvency certificate is a written statement (usually signed by one or more directors) confirming the company meets the solvency test under the Companies Act 1993. Broadly, that means the directors are of the opinion that:

• Liquidity limb: the company will be able to pay its debts as they become due in the normal course of business; and
• Balance sheet limb: the value of the company’s assets will be greater than the value of its liabilities (including contingent liabilities).

In plain English: it’s a formal sign-off that your company is financially healthy enough to do what it’s about to do - not just today, but over the relevant period for the transaction.

Why Does A Solvency Certificate Matter?

Solvency isn’t just an accounting concept - it’s a legal one.

New Zealand company law expects directors to make responsible decisions, and that includes not letting the company take steps that would prejudice creditors. A solvency certificate is one way directors evidence that they’ve turned their minds to the company’s financial position before making certain decisions.

Because a solvency certificate is typically signed by directors, it can also become important later if someone challenges the company’s actions (for example, if the company goes into liquidation and a liquidator reviews past transactions).

Is A Solvency Certificate The Same As A Solvency Resolution?

They’re related, but not always the same thing.

• A solvency resolution is a board resolution where the directors resolve that the company is solvent (and sometimes approve a specific action).
• A solvency certificate is the signed certificate confirming solvency (often attached to, or referred to in, the board minutes/resolution).

In practice, businesses often use both: directors pass a resolution and sign a certificate as a record.

When Do You Need A Solvency Certificate?

You won’t need a solvency certificate for everyday decisions like buying stock, paying suppliers, or signing a customer contract.

It generally comes up when the company is doing something that involves returning value to shareholders, restructuring its capital, or taking an action that could affect creditors.

That said, it’s important to distinguish between:

• Situations where the Companies Act requires directors to sign a certificate (for example, certain distributions or share buybacks); and
• Situations where a third party requests a certificate (for example, a lender, investor, or counterparty asking for comfort as part of a transaction).

Common situations include:

• Share buybacks (where the company buys its own shares back from a shareholder)
• Distributions to shareholders (for example, dividends)
• Company restructures and changes to capital arrangements
• Some lending or finance transactions, where a lender wants comfort that the company is solvent
• Business sales or acquisitions, where a party wants evidence the company can meet obligations

If you’re preparing for a capital or ownership change, it’s also a good time to make sure your broader governance documents are in order - for example, a Company Constitution can affect what approvals are required and what steps directors must follow.

Solvency Certificates And Share Buybacks (A Common Trigger)

One of the most common reasons companies go looking for an NZ solvency certificate template is a share buyback.

In many cases, a share buyback involves the company paying money (or providing value) to a shareholder in exchange for shares. Because this reduces company assets, the law expects directors to only proceed if the company will still satisfy the solvency test after the buyback (including being able to pay its debts as they fall due over the relevant period).

If you’re considering a buyback, it’s worth getting the documentation right - including the transaction documents themselves (not just the solvency certificate). Depending on your situation, that might include a Share Buyback Agreement and properly drafted board minutes.

What Should A Solvency Certificate Include?

There’s no one “official” government-issued wording for a solvency certificate in NZ. What matters is that the certificate clearly addresses the solvency test, is accurate, and is signed by the right people.

A well-prepared solvency certificate usually includes:

• Company details (legal name and NZBN/company number)
• Date of the certificate
• Name(s) of director(s) making the certification
• The solvency statements (liquidity and balance sheet solvency)
• The grounds for the opinion (what the directors relied on)
• The transaction or action the certificate relates to (optional but often recommended)
• Director signature blocks

Cashflow Solvency Vs Balance Sheet Solvency (In Simple Terms)

Most solvency certificates cover two ideas:

• Liquidity/cashflow solvency: the company will be able to pay its debts as they fall due in the normal course of business (often assessed looking forward over the relevant period for the transaction).
• Balance sheet solvency: the value of the company’s assets is greater than the value of its liabilities (including contingent liabilities).

You generally want both. A company can have valuable assets (like equipment or IP) but still be cashflow insolvent if it can’t pay bills on time. And a company might have strong revenue but still be balance sheet insolvent if its liabilities exceed its assets.

What “Grounds” Should Directors Refer To?

This is where templates often fall short.

It’s not enough to simply state “we think the company is solvent”. You should record what you considered when forming that view. For example:

• Current management accounts (profit and loss, balance sheet)
• Bank statements and cashflow forecasts
• Debtor and creditor schedules
• Upcoming tax obligations (for example GST, PAYE and income tax) - however, this is not tax advice and you should check your tax position with your accountant
• Existing loan agreements and repayment schedules
• Any contingent liabilities (e.g. guarantees, disputes, warranties)
• Expected income and signed contracts in the pipeline

This doesn’t need to be a novel, but a clear record helps show that the directors took reasonable steps before signing.

How To Prepare A Solvency Certificate (Step-By-Step)

If you’re using a solvency certificate template, treat it like a starting point - not a box-ticking exercise. A director’s signature is a serious thing, so you want to slow down and do it properly.

1. Confirm What The Certificate Is For

Start by being clear on why you need the certificate:

• Is it for a share buyback?
• Is it required under the Companies Act (for example, for a distribution or buyback), or is it being requested by a third party?
• Is it required under your constitution?
• Is it a bank or investor request?
• Is it part of a business purchase or sale process?

This helps you tailor the wording and avoid a generic certificate that doesn’t match the transaction.

2. Check Your Company’s Governance Documents

Before directors sign anything, check what approvals and processes your company needs to follow.

For example, your constitution and shareholder arrangements might require particular director approvals, shareholder approvals, or notice periods. If you have a Shareholders Agreement, it’s worth checking whether it imposes additional requirements around capital changes, buybacks, or transfers.

3. Gather The Financial Information You’ll Rely On

This is the “proof” behind the certificate. At a minimum, you’ll usually want:

• Recent balance sheet and profit and loss statement
• Cashflow forecast (at least for the next 3–6 months, often longer if the transaction is significant)
• Bank balances and facility statements
• A list of liabilities (including due dates)

If your business is seasonal, or you’re about to take on a large cost (like fit-out, equipment purchase, or a big marketing campaign), make sure your forecast reflects that.

4. Identify Any “Hidden” Risks

One of the easiest ways to accidentally sign a misleading solvency certificate is to forget about liabilities that aren’t sitting neatly in your accounting software.

Think about:

• Disputes with customers or suppliers
• Warranty claims or refund exposure (especially if you sell products)
• Personal guarantees directors may have given (not always a company liability, but can affect decisions)
• Lease make-good obligations
• Employment liabilities (e.g. accrued leave, notice periods, potential claims)

If you have staff, employment liabilities can be significant. Having clear employment documentation helps you quantify obligations properly - including an Employment Contract that clearly sets out pay, leave, and termination terms.

5. Draft The Certificate (And Match It To Your Board Minutes)

Your solvency certificate should align with what the directors are approving in the board minutes/resolution.

For example, if the board resolves to proceed with a share buyback on certain terms, the certificate should be dated appropriately and (where relevant) refer to that buyback so it’s clear what the solvency assessment relates to.

Make sure the names and roles of directors are correct and match Companies Office records.

6. Sign And Store It Properly

Once signed, store the solvency certificate with your company records (alongside the board minutes and any transaction documents). You want a clear “paper trail” showing the steps were followed properly.

If the document will be provided to a third party (like a lender or investor), ensure you’re comfortable with what you’re sharing and whether any confidential information is included.

Common Mistakes With Solvency Certificate Templates (And How To Avoid Them)

Templates can be helpful, but solvency is one of those areas where a copy-and-paste approach can create real risk.

Here are some common mistakes we see small businesses make when using a solvency certificate template:

Signing Without A Real Solvency Assessment

If directors sign without reviewing up-to-date information, they expose themselves (and the company) to disputes later. Even if the business “feels fine”, you still need to check the numbers.

Using Outdated Financials

A balance sheet from six months ago might be meaningless if you’ve recently taken on new debt, lost a major customer, or had a tough quarter.

Ignoring Contingent Liabilities

If there’s a potential claim, guarantee, or looming obligation, it should be considered. It doesn’t always mean the company is insolvent, but directors should show they’ve factored it into their view.

Not Aligning The Certificate With The Transaction Documents

For example, if a buyback is conditional on finance approval or a particular date, but the solvency certificate assumes immediate payment, you can end up with inconsistent documentation - which is never ideal if something goes wrong.

Not Getting Tailored Advice When Things Are Tight

If cashflow is stressed, debt is high, or the company is going through change, it’s worth getting advice before signing. A solvency certificate should be accurate for your specific circumstances - not just “standard wording”.

If your company is also dealing with wider contractual changes (like changing parties to an agreement), you may need supporting documents such as a Deed of Novation or other transaction paperwork that aligns with the solvency position and the commercial deal.

Key Takeaways

• A solvency certificate is a director-signed statement confirming the company meets the Companies Act solvency test, including that it will be able to pay its debts as they fall due and that its assets exceed its liabilities (including contingent liabilities).
• Small businesses commonly deal with solvency certificates for higher-stakes actions like share buybacks, distributions, capital restructures, or when lenders/investors request confirmation of solvency - but whether a formal director certificate is legally required depends on the specific transaction and the Companies Act requirements.
• A good solvency certificate template should include the company details, date, director details, the solvency statements, and (importantly) the grounds directors relied on.
• Directors should prepare a solvency certificate by gathering up-to-date financial information, considering contingent liabilities, and ensuring the certificate matches the board minutes and transaction documents.
• Using a generic template without doing a real solvency assessment can create risk for both the company and its directors, especially if the company’s financial position is tight or changing.

Important: This article is general information only and does not constitute legal or financial advice. Solvency assessments are fact-specific, and you should get legal advice and speak with your accountant about your company’s financial position (including tax obligations) before signing any solvency certificate.

If you’d like help preparing a solvency certificate (or documenting a share buyback or other company transaction properly), you can reach us at 0800 002 184 or team@sprintlaw.co.nz for a free, no-obligations chat.