How to distribute net profit

In accordance with Russian law, the net profit earned by an enterprise as a result of its financial and economic activities may be distributed among the participants of this legal entity, or may remain at the organization’s disposal (for financing capital investments, social payments, etc.).

Instruction manual

1

When distributing the profits of an enterprise, it can be used for the following purposes: - paying dividends to members of the company, - creating a reserve or other fund, - increasing the authorized capital. All shareholders of the company are entitled to take part in the distribution of profits.

2

Please note that profit is distributed among participants on the basis of a decision of the general meeting of shareholders, which can be taken once a year, six months or quarterly. But at the same time, legislation provides for prohibitions on the distribution of profits in some cases: - if the charter capital has not been fully paid, - if the actual costs of the shares of the participants that give the right to receive such payments have not been paid, - if the company has signs of financial insolvency, - if the cost net assets below the authorized capital or reserve fund. As soon as these circumstances are eliminated, the profit can be distributed among the participants.

3

Due to net profit, you can create or increase the funds of the enterprise. Moreover, there are no restrictions on the order of formation and size of the reserve and other funds.

4

In addition, you can direct profits to increase the registered capital. However, this operation is carried out only after full payment. The authorized capital cannot be increased by more than the difference between the value of net assets and the sum of the authorized capital and reserve fund of the enterprise. Moreover, the growth of the authorized capital leads to a proportional increase in the value of the shares of all its participants.

5

You can direct the net profit of the current year to paying off losses of previous years, making social expenses, and paying additional bonuses to employees. The size of these payments is not limited by law and is approved by the general meeting of shareholders.