No Purchase, Redemption or Other Acquisition When Insolvent Clause Samples
The "No Purchase, Redemption or Other Acquisition When Insolvent" clause prohibits a company from buying back, redeeming, or otherwise acquiring its own shares if it is insolvent or would become insolvent as a result of such a transaction. In practice, this means that before undertaking any share repurchase or redemption, the company must assess its financial status to ensure it remains solvent after the transaction. This clause is designed to protect creditors and maintain the financial stability of the company by preventing actions that could further endanger its ability to meet its obligations.
No Purchase, Redemption or Other Acquisition When Insolvent. The Company must not make a payment or provide any other consideration to purchase, redeem or otherwise acquire any of its shares if there are reasonable grounds for believing that:
(1) the Company is insolvent; or
(2) making the payment or providing the consideration would render the Company insolvent.