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Solvency Confirmation Letter Template for Singapore

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Key Requirements PROMPT example:

Solvency Confirmation Letter

"Need a Solvency Confirmation Letter for our Singapore-based manufacturing company to submit to DBS Bank for a new credit facility application, confirming our ability to service debts for the next 12 months from March 2025."

Document background
A Solvency Confirmation Letter is typically required in Singapore for various business transactions, including tender submissions, loan applications, or major contract negotiations. The document must comply with Singapore's Companies Act and IRDA 2018, providing explicit confirmation of both cash flow and balance sheet solvency. The letter should include current financial status, forward-looking statements about debt servicing capability, and must be signed by authorized personnel. Notably, making false declarations can result in serious legal consequences under Singapore law.
Suggested Sections

1. Letter Header: Company letterhead, date, reference number, and addressee details

2. Declaration of Authority: Statement of authority to make the declaration (e.g., director, authorized officer)

3. Company Details: Full legal name, registration number, and registered address

4. Solvency Statement: Clear declaration of company's solvency status including both cash flow and balance sheet tests

5. Financial Position: Brief overview of current financial position and ability to pay debts

6. Signature Block: Authorized signatory details and signature

Optional Sections

1. Additional Financial Details: Detailed financial metrics when required by recipient - used when specifically requested or for regulated entities

2. Third Party Confirmation: Confirmation from auditors or accountants - used when external verification is required

3. Group Structure Reference: Information about parent/subsidiary relationships - used for companies within a group structure

Suggested Schedules

1. Financial Statements: Recent balance sheet and profit/loss statements

2. Board Resolution: Copy of board resolution authorizing the solvency declaration

3. Auditor's Report: Independent auditor's report confirming financial position

Authors

Alex Denne

Head of Growth (Open Source Law) @ ¶¶Òõ¶ÌÊÓÆµ | 3 x UCL-Certified in Contract Law & Drafting | 4+ Years Managing 1M+ Legal Documents | Serial Founder & Legal AI Author

Relevant legal definitions

























Clauses




















Industries

Companies Act (Chapter 50): Primary legislation governing corporate matters including solvency statements, definition of solvency under Singapore law, and directors' duties regarding solvency declarations

Insolvency, Restructuring and Dissolution Act 2018 (IRDA): Key legislation defining insolvency, establishing tests for solvency (cash flow and balance sheet tests), and requirements for statutory declarations

Criminal Law (Temporary Provisions) Act: Legislation covering implications of making false declarations and penalties for misrepresentation in solvency statements

MAS Financial Regulations: Regulatory requirements from Monetary Authority of Singapore, particularly relevant for financial institutions and their specific solvency requirements

Banking Act (Chapter 19): Specific legislation governing banking institutions and their solvency statement requirements

Cash Flow Solvency Test: Legal requirement to assess whether a company can pay its debts as they fall due

Balance Sheet Solvency Test: Legal requirement to assess whether a company's assets exceed its liabilities

Directors' Liability Requirements: Legal obligations and potential personal liability of directors in making solvency declarations

Statutory Declaration Requirements: Formal requirements for making valid declarations under Singapore law including proper format and execution

Teams

Employer, Employee, Start Date, Job Title, Department, Location, Probationary Period, Notice Period, Salary, Overtime, Vacation Pay, Statutory Holidays, Benefits, Bonus, Expenses, Working Hours, Rest Breaks,  Leaves of Absence, Confidentiality, Intellectual Property, Non-Solicitation, Non-Competition, Code of Conduct, Termination,  Severance Pay, Governing Law, Entire Agreemen

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