The new act on business corporations sets out new rules for payments from the company’s own resources. The basic condition for profit payment applicable to all type of business companies is so-called insolvency rules, according to which no business corporation may pay out any profit or funds from its own resources, if such act resulted in bankruptcy pursuant to the insolvency act.
In the case of joint-stock companies, one more limiting rule is added to the insolvency test, according to which any profit or any company’s own resources may be distributed in the amount exceeding the economic result value of the last completed accounting period plus the retained earnings from previous years and minus the accumulated losses from previous year and contributions to reserve funds and other funds as specified in law or in the Articles of Association.
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