It can be said that, according to the provisions of Articles 452 and 453 of the Commercial Code, the only reserve required to set up a capital company is the legal reserve, since the main objective is to cover the obligations that the company can acquire against losses; This reserve guarantees a possible rescue of the company in the years when the losses are not made, but the losses. On the other hand, there are the legal reserves, as their name suggests, are those indicated in the articles of association of the company; Unlike the legal reserve, the rules of this type of reservation are indicated by the partners, such as the amount and purpose of the same, moreover, they are no longer mandatory in the following cases: According to the above information, the legal reserve account must reach 20% of the company`s share capital. The calculation: 2,000,000 x 20% = €400,000 if it were to reach this 20%, it would be missing €150,000. In view of the above, the legal requirement to set aside reserves should be abolished or at least relaxed so that reserves for possible losses©of an undertaking can be constituted by the same undertaking in the traditional way. That is, it is the shareholders and managers of the company themselves who decide the most effective way to plan their finances . This will not only eliminate a paternalistic and invasive measure in public limited companies, but also©allow the Peruvian legal system to be a competition jurisdiction, which, together with other measures, will facilitate local and foreign investments . With regard to minimum reserves, this includes the value of liquid profits to comply with legal requirements for the protection of the company`s assets. Is the legal reserve used to save bread for May? Losses©in a financial year are offset by freely available profits or reserves. In the absence of these©, they shall be offset by the statutory reserve.
In the latter case, the legal reserve must be replenished. The company can capitalize the legal reserve and is obliged to replenish it. The legal reserve shall be replenished by allocating it to the profits of the following years in accordance with the procedures laid down in this Article. According to Article 452 of the Commercial Code, companies are required to set up a legal reserve consisting of 10% of the profit of each after-tax period up to a maximum of 50% of the subscribed capital, the purpose of which is to protect the company`s assets, so that it is intended to cover the losses of the following years in which it was used. if need be. Amount to be considered to increase the legal reserve The amount to be contributed in an absolutely mandatory manner must be 10% of the annual profit until the total legal reserve reaches at least 20% of the company`s share capital. If this reserve reaches this fifty percent, the company is not obliged to continue to transfer ten percent of the net profit to this account. If, however, it decreases, it must reuse the same ten per cent of these profits until the reserve reaches the fixed limit again. This reserve must be established in the articles of association of the company and is composed of the rules laid down by the partners as regards the amount and object. Its origin is not established by law. Remember that the reserve is taken from the profits of the year, so the recording or accounting entry would look like this: we start with the legal reserve in the company because it is the best regulated, and the legal reserve in other types of companies usually refers to the rules of the company.
Companies that are not legally required to set up a legal reserve may be taken into account in the articles of association. The purpose of the reserve is to protect the assets of the company, so it cannot be used other than in this eventuality or eventuality. The legal reserve is mandatory provided that the company has profits on which it can build it. As for the accounting of the legal reserve, it is part of the inheritance, more precisely in the 330505 account according to the Colombian uniform chart of accounts. In this case, the amount of $28,715.00 will be deducted from the 2019 result to increase the legal reserve, with which it will have an amount of $60,000.00, representing one fifth of the share capital of the Company. `The limited partnership shall constitute a legal reserve of at least fifty per cent of the subscribed capital, consisting of ten per cent of the net profit for each financial year. If it reaches this limit or the limit provided for in the articles, whichever is higher, the company is not obliged to increase it further, but if it decreases, it will reuse the same ten percent of these profits until the reserve reaches the fixed amount again. If the company does not generate profits in a year or year, it is not obliged to allocate funds to the legal reserve, because this legally required 10% is attributable to liquid profits and these cannot exist in case of losses.
The legal reserve will no longer be mandatory when the 100% is formed, as in the determination of the legal reserve of the legal reserve on the basis of the net profit of 2019 In a company, the legal reserve is a type of savings that the company must hold. Imagine that a joint-stock company has a share capital of € 2,000,000 and that its legal reserve reaches an amount of € 250,000 at that time.