Therefore, the legal reserve consists of the 10% that the company accumulates from the profits of the balance sheet that it owns, for example, only the net assets that the company received from the last liquidated year. The legal reserve is one of the most commonly used economic instruments, as it allows companies to create and maintain economic support that meets all eventualities. For joint-stock companies with variable capital, it is found in Article 295 of the French Commercial Code; which goes to articles 123 and 124 as follows: In Mexico, the legal reserve is ordered by the laws imposed in the book „General Law of Commercial Companies“, which examines how a company must protect at least 5% of its net capital in order to generate this reserve. The percentage and amount of the legal reserve are governed by this Code for each group of companies. The legal reserve must be restored in the same way if it decreases for any reason. Then, this legal reserve is affected if the company does not cover the compulsory expenses that it must respect, so that the legal reserve is finally used so that the company does not have problems of a legal or institutional nature. The application of these percentages travels around the world because they are effective when used to maintain an economic failure that can occur over time. Amendments approved by Congress will correct certain inaccuracies regarding the legal reservation until they are published. Article 36 has not been amended and its interpretation leads to two different values. It stipulates that at least five percent of a company`s net profit must be set aside each year in order to build up such a reserve. When it comes to net income, this leads to the interpretation that the profit can be made before income tax or profit after tax. In our opinion, it is possible to calculate it with one of the two values as a basis. As we explained above, the legal reserve is a tool that many companies use to have monetary support for new investments or productions that can destabilize the economy of the same.

Suppose a business has a tax period from January to December of each year. To calculate the legal reserve, you must do so with the accounting balances as of December 31 of the previous year. If that company reaches the point where the annual statutory reserve exceeds one fifth of the share capital it holds by virtue of its financial security, that statutory reserve shall become the investment currency at its disposal; in this way, it is explained by the General Law of Commercial Companies (LGSM). Good morning, ladies and gentlemen, on this occasion I share the following doubts that I have, arising from a publication I have read in the free press. Article 37 of the decree provides that this reserve may not be distributed in any form whatsoever until the liquidation of the company. He adds that it can be capitalized if it exceeds 15% of the capital at the end of the previous year. The flaw is that it does not specify what capital it relates to, whether it is paid-up capital or approved capital. It has been interpreted as the one paid from such an account, that once the reserve exceeds 15% of that capital, the entire accumulated value can be capitalized, since the wording of that article is interpreted as such. If, at that time, while the reforms have not entered into force, the partners of a company decide to capitalize the legal reserve, they can transfer all of it to the capital on the basis of the literal text of the law.

The article goes on to say that without prejudice to the additional capitalization of 5% per year, which can be interpreted as meaning that after capitalization, it is possible to continue to capitalize it for consecutive years, that is, the company would no longer have an accumulation of legal reserves. This misrepresentation is corrected by the reforms and it is noted that the surplus of 5% can be capitalized annually if the statutory reserve exceeds 15% of the paid-up capital at the end of the previous financial year, without prejudice to the company`s obligation to further separate the 5% per year corresponding to the statutory reserve. Now it is specified that the paid-up capital is used, the surplus is capitalized and at least five percent must be in reserve. This is an obligation that the Commercial Code (CdeC) imposes on commercial enterprises and that the reforms clarify its application, but this reservation makes no sense. The legal reserve in Guatemala must be calculated on the basis of the net profit of each financial year of each company. This brings us to the point that it is not possible to calculate it over an interim period. I share the link of the publication: www.prensalibre.com/opinion/opinion/para-que-sirve-la-reserva-legal which refers to the following: the legal reserve must be restored in the same way if it decreases for any reason. (Reservation-legal) With the above, the net profit for the year is equal to 250.00, the assumption for the reserve would be based on 250.00, which is false. That is, the legal reserve is a percentage of our profits that is intended to be stored and accumulated until it has to be used to compensate for economic difficulties that may arise in the future. Article 123.- The amount allocated annually to the constitution of the legal reserve of the limited liability company; amounts to seven per cent of the net profit and the minimum legal limit of this reserve is one fifth of the share capital. In the first case, the profit is net, since all related expenses, including income tax, have been deducted.

In the second case, SRI has not yet been determined. The tax is set as a percentage of 25% on the public service, for this example the SRI is 87.50. Net profit for the year was 262.50. Article 124.- Two-thirds of the quantities listed in the legal reserve must be made available; or invest in salvadoran or Central American commercial newspapers that are easy to make; the other third party may be invested in accordance with the purpose of the Company. The value of the legal reserve is the sum of all the accounting profits that this company has, after this amount has already been paid without taxes or tax payment, 10% of this total amount is available to be allocated to the tax reserve of this company. This is called a legal reserve for everything a company is required to accumulate to support possible damages that may occur in the future. `ARTICLE 36 STATUTORY RESERVATION. Of a company`s net profits each year, at least five percent (5%) must be separated each year to form the legal reserve. „In bankruptcy cases, some companies disappeared, mocking suppliers and creditors, and maybe they had saved millionaire sums in their accounts in legal reserves, and it didn`t work to bail them out and meet their financial obligations. In the following text you will find everything you need to know about the legal reserve, with what percentage they are trained, how the value of each reservation is determined, what is the maximum limit they must respect and to what extent they can be used.