Unless you have lodged a financial report with ASIC in the last 12 months, it is a requirement that company directors must pass and store a solvency resolution within two months of the annual review date.
A solvency resolution is made by the directors of a company that, in their opinion, the company can or cannot pay back its debts when they are due. The directors must have a reasonable basis for their opinion and the resolution must be passed by a majority.
The solvency resolution may be a positive solvency resolution which is passed when the directors believe that the company will be able to pay its debts when they are due, or, a negative solvency resolution which is passed when directors believe the company will not be able to pay its debts when they are due. If the solvency resolution passed is negative, the company will need to lodge a form 485 – statement in relation to company solvency.