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Reserve capital has been accumulated from statutory contributions from profits generated in previous financial years, from surplus of profit distribution in excess of the value of statutory allocations, as well as from merger of PGE S.A. with its subsidiaries.
Under the Commercial Companies Code, the joint-stock companies are required to create reserve capital to cover losses. After each financial year, at least 8% of net profit disclosed in the Company’s separate financial statements should be contributed to this capital, until the funds reach at least one-third of the entity’s share capital. A part of reserve capital equal to one-third of the share capital may be used exclusively to cover a loss disclosed in separate financial statements and may not be used for any other purposes. Decisions as to the use of reserve capital and other capital reserves may made by the General Meeting.
Reserve capital subject to distribution to shareholders amounted to PLN 13,281 million as at December 31, 2019 and to PLN 13,484 million as at December 31, 2018.
