The same article 36 of the Commercial Code states that at least five percent (5%) must be separated each year to form the legal reserve, the above gives an open letter to companies that if they need to separate a higher percentage, they can do so without prejudice to the law. This can be beneficial as a type of savings and have a very specific plan to deal with complex situations in the future. This legal reserve is mandatory for every company, as it will not only be able to bear possible damages, but will also have to face mandatory payments, sparing these companies legal problems. By adjusting the capital of its seniority and the legal reserve that maintained it to the value without adjusting it initially, it may happen that it was already limited to 20% before the adjustment and no longer represents this 20% on the adjusted capital; In this case, 5% of the result must be repaid year after year. Until it stops again at 20% of the adapted, as required by law (there is no need to recompose). The legal reserve is mandatory provided that the company has profits on which it can build it. The legal or mandatory reserve, as its name suggests, is mandatory for joint-stock companies, limited partnerships, foreign companies and limited partnerships by shares, regulated in all cases by Article 452 of the Commercial Code, which complies with the regulations of capital companies. There is an important point to consider in the calculation, and Article 36 of the Commercial Code stipulates that it must be the net profit of each year. When the company is formed or subsequently by resolution of the general meeting, a statutory reserve may be set aside for such purposes as the members deem appropriate. «THE STATUTORY RESERVE SHALL BE CALCULATED FOR EACH PERIOD BY APPLYING 10% OF THE AVAILABLE RESULTS TO THE SUPREME BODY. Article 452 of the Commercial Statute stipulates that companies shall constitute a legal reserve equal to at least fifty per cent of the subscribed capital, which shall consist of ten per cent of the liquid profit of each year. (Emphasis added). It should be noted that± as indicated in the preceding paragraphs, the legal reserve is determined on the basis of the net accounting results obtained, regardless of whether the amounts determined in accordance with the tax rules on income tax and employee participation are higher or lower than those determined by the accounts.

Therefore, in the case presented by the accounting officer of the company, the legal reserve is made as follows: Glossary R Legal reserve: what is it and how is it calculated? Companies that are not legally required to set up a legal reserve may be taken into account in the articles of association. In this case, we see that of the profit of € 1,000 obtained, 10% goes to the legal reserve and the rest is intended to cover a previous negative year. The purpose of the legal reserve is defined in article 456 of the same factory: note that the minimum amount of the legal reserve is 50% of the subscribed capital, since the company has the authorized capital, subscribed and paid. Colombian commercial legislation stipulates that a reserve of 10% of the net profit of the company must be created until the equivalent of 50% of the subscribed share capital is reached, which can exceed this 50%, which corresponds to a surplus of the minimum legal reserve. The legal reserve does not apply if the 100% reserve is fulfilled, as in the statutory reserve. The company may well absorb this surplus and build up or increase a statutory or occasional reserve or distribute it as a dividend among shareholders. In this context, Article 229 LGS provides for the obligation that at least ten percent (10%) of the distributable profit of each year, less income tax, be transferred to a legal reserve until it reaches an amount equal to one fifth of the capital (i.e. up to 20% of the capital). And adds that in the event that the reservation is excessive, it does not have the condition of legal reserve. Reserves can be legal, statutory or occasional: indeed, it is not possible to charge more than what is required by law, and the law only requires the constitution of a reserve of up to 50% of the share capital.

Then, this legal reserve is allocated if the company does not cover the compulsory expenses that need to be covered, so that the legal reserve is finally used, so that the company does not have problems of a legal or institutional nature. On the other hand, as its name suggests, the legal reserve has its origin in the law from which it derives not only from its binding force but also from its purpose, since, in accordance with Article 456 of the Commercial Code, that reserve may be used only to cover losses incurred during the various tax years. and only in cases where no statutory and occasional reserve has been established for this purpose, or if it is not sufficient. `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. In addition to the statutory reserve, there are statutory reserves that the company has taken into account in its articles of association or articles of association.