Articles 74 et seq. of the TRLSA regulate the treatment of own shares or own shares of companies. Although this chapter does not address the content of these articles, it must be clear that the acquisition of own shares is a lawful transaction and, if carried out, there will be an effective reduction in the number of shares, which the law aims to mitigate by providing a reserve of an unavailable nature for the amount of own shares acquired and which will remain on the balance sheet. as long as there is no alienation of the same. The purpose of the legal reserve is therefore to protect the share capital from possible losses. Companies cannot freely dispose of these reserves or use them for whatever they want, but their only purpose is to respond to losses. These types of reserves are those generated by profits that have not been distributed at the end of the year, whether by legal mandate, by determination of the law or by the will of the partners. Determination of the statutory reserve on the basis of the 2019 net income Reinterpretation of the asset reserves on the basis of the UFV-Sec. Details savings and credit cooperatives, are obliged to constitute the legal reserve up to 50% of their paid-up capital? We start with the legal reserve in the corporation because it is the one that is best regulated, and the legal reserve in other types of corporations usually refers to the rules of the corporation. If this reserve reaches the fifty percent mentioned above, the company is not obligated to continue to transfer ten percent of the liquid profits to this account. But if it decreases, it will reuse the same ten percent of those profits until the reserve reaches the fixed limit again. The legal reserve can only be used for the provisions of the law, and this only allows its use to cover losses, as stated in Article 456 of the Commercial Code: this reservation has been included in section 5.1. «Reserves from retained earnings», because although their birth is paid into «voluntary reserves», these previously came from profits.

In addition to the legal reserve, there are legal reserves that are those that the company has taken into account in its statutes or statutes. In this case, the net assets of «DOCE, SA» are 15,000 U.M., represented by 10,000 U.M. in the share capital and 5,000 U.M. in the form of voluntary reserves. Its materialization in assets is 12,000 U.M. in banks and 3,000 U.M. in shares. The joint-stock company «NUAL, SA» has a share capital of 1,000,000 u.m., paid in 75 per 100. The legal reserve amounts to 160,000 u.m. At the end of the financial year, «NUAL, SA» made a profit of 200,000 rpm.

In summary, it is possible to compensate for the losses of the year with the voluntary reserves, and it is advisable to do so to project a better image of the company`s assets, as this is the appropriate time to pay the compensation before the end of the year. In this case, we see that of the €1,000 benefit obtained, 10% goes into the legal reserve and the rest is intended to cover a previous supposed negative year. In fact, reserves could be depleted in future negative years to©cover losses or a decline in commercial production. The allocation of reserves may result from these circumstances and their replenishment is subject to the profit warning. Provided that a company that achieves a result of € 10,000 this year, its former share capital of € 50,000 and the statutory reserve of € 9,000. What amount is missing for the statutory reserve of 20% of the share capital? Assuming a liquid profit of $5,000,000, the use of the legal reserve in this case ($5,000,000 – income tax) would be x 10%, so there are three main blocks of reserves: the company can either take this surplus and form, increase a legal or occasional reserve, or distribute it as a dividend among the partners. It can be said that according to the provisions of articles 452 and 453 of the Commercial Code, the only reservation obliged to constitute a company is the legal reserve, since the main purpose is to cover the obligations that the company can acquire in the event of losses; This reserve guarantees a possible rescue of the company in the years when profits are not made, but lost. Below is a brief description of each reserve mentioned in this block. It is important to note that the «share issue premium» will be an available reserve, i.e. at a certain time when this reserve can be removed from the company without legal obstacles.

For accounting, the statutory reserve is part of the net assets and is then an item that partially determines the value of the enterprise at the accounting level. Indeed, the difference between a company`s assets and liabilities translates into net worth. In a society, there may be different types of reserves that coexist and may have a different purpose; On the one hand, the Commercial Code refers to the legal obligation of reserve, which is nothing more than the obligation of the company to hold ten percent of the profits of each financial year, up to fifty percent of the subscribed capital, in which case it will not be necessary to continue to deduct said ten percent profits. It is therefore very important that the institution concerned makes the appropriate entries relating to the legal reserve. In particular, when establishing this note, the services performed during the corresponding year are determined, then it is specified what is the amount that corresponds to the 10% of the legal reserve. The legal reserve is also the one that a company (company) must have in accordance with the applicable regulations. In some countries, the legal reserve must be equal to 10% of the last fiscal year of the company until it reaches at least 20% of its share capital. This legal reserve is used to compensate for losses in the event that the company has no other reserves for this purpose. In Colombia, some commercial companies, such as corporations, are required by law to set aside a reserve to protect the company`s assets in the event of losses. Reservations can also be made with the company`s advisory body (meetings), on the profits of the year, with a specific purpose or in the form of a forecast.

These are the so-called optional or voluntary reserves. If the reserve is calculated on net profit, we must specify whether this is done before or after taxes. Finally, there are the occasional reserves that do not need to be provided for in the statutes, but if they can be ordered by the assembly, in this case they will be mandatory for the exercise in which they are ordered; The object of this type of reservation may be determined by the Assembly itself, which may even modify the object for which it was created; In fact, the Assembly may also distribute them among the members if their consent was not required. Indeed, it is not possible to charge more than the law has required, and the law only requires to constitute a reserve until 50% of the share capital is reached. Article 170.- (NON-CREATION OF RESERVED). The directors, directors and trustees are jointly and severally liable for the violation of the provisions of the first part of the preceding article and, where appropriate, are obliged to provide the company with an amount equal to the reserve that has still been constituted and may repeat it to the partners for the amount illegally distributed.