Section 66: Recovery of distributions

66. Recovery of distributions (1) A distribution made to a shareholder at a time when the company did not, upon distribution being made, satisfy the solvency test may be recovered by the company from the shareholder unless— (a) the shareholder received the distribution in good faith and without knowledge of the company’s failure to satisfy the solvency test; (b) the shareholder has altered the shareholder’s position in reliance on the validity of the distribution; and (c) it would be unfair to require repayment in full or at all. (2) Where, in relation to a distribution made to a shareholder— (a) the procedure set out in section 61 has not been followed; or (b) reasonable grounds for believing that the company would satisfy the solvency test in accordance with section 61 or 81, as the case may be, did not exist at the time the certificate was signed, a director who failed to take reasonable steps to ensure the procedure was followed or who signed the certificate, as the case may be, shall be personally liable to the company to repay to the company so much of the distribution which cannot be recovered from shareholders. (3) Where, by virtue of section 61 (4), a distribution is deemed not to have been authorised, a director who— (a) ceases after authorisation but before the making of the distribution to be satisfied on reasonable grounds for believing that the company would satisfy the solvency test upon the distribution being made; and (b) fails to take reasonable steps to prevent the distribution being made, shall be personally liable to the company to repay to the company so much of the distribution which cannot be recovered from shareholders. [Issue 1] C35 – 52 Revised Laws of Mauritius (4) Where, by virtue of section 65 (5), a distribution is deemed not to have been authorised, a director who fails to take reasonable steps to prevent the distribution being made shall be personally liable to the company to repay to the company so much of the distribution which cannot be recovered from shareholders. (5) Where, in an action brought against a director or shareholder under this section, the Court is satisfied that the company could, by making a distribution of a lesser amount, have satisfied the solvency test, the Court may— (a) permit the shareholder to retain; or (b) relieve the director from liability in respect of, an amount equal to the value of any distribution that could properly have been made.