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Legal reserves
The reserves which a company is required to form to comply with legal requirements (e.g. company law). Art. 5 of Switzerland's Banking Law stipulates that 5% of the annual profit is to be allocated to a reserve fund (until 20% of the paid-in capital has been reached) plus a tenth of the amount distributed from the annual profit after the regular allocation to the reserve fund and after payment of 5% to shareholders and others entitled to a share in profits. Any premiums generated during share issues must be allocated to the legal reserves, unless they are used for depreciation or employed for charitable purposes. See also voluntary reserves, reserves.
- Part of Speech: noun
- Synonym(s):
- Blossary:
- Industry/Domain: Banking
- Category: Investment banking
- Company: UBS
- Product:
- Acronym-Abbreviation:
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