Commercial Companies Law 2001: Contents

Commercial Companies Law 2001
Commercial Companies Law
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Article (224)

10% of the net profits shall be deducted every year and set aside for the statutory (legal) reserve, unless the articles of association specify a higher percentage.

Such deduction may be suspended if the reserve amounts to 50% of the paid-up capital, unless the articles of association provide for a higher percentage. Yet, if the statutory reserve falls below the said percentage, deduction shall be resumed until the reserve reaches the said percentage.

The statutory reserve shall not be distributed to the shareholders, but may be used to ensure the distribution of dividends to the shareholders not exceeding 5% of the paid-up capital in the years in which the company's profits do not allow to ensure such limit.

Subject to the approval of the general assembly, a percentage of the company's net profits that results from the sale of fixed assets or any compensation in lieu thereof may be distributed, provided that this shall not lead to the company's inability to restore the original condition of its assets or to buy new ones.

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