The distribution of profits is not the same for every company

The Accounting Act does not specify the time at which an entity should perform the distribution of profit, stating only that the financial statements should first be approved and a resolution should be adopted to determine the method of distribution of profit. In any company, private or commercial, the profit earned may be allocated for the following purposes:

•  Supplementary capital,
•  Reserve capital,
•  Dividend payments,
•  Coverage of losses from previous years,
•  Payment of rewards for employees,
•  Granting of donations,
•  Investments,
•  Payments to the company social fund, 
• Other goals indicated in a resolution.

Distribution of profit in a limited liability company

In the limited liability company the distribution of profit covers the net financial result and is based on a resolution adopted at the meeting of shareholders. The profit generated by the company's business is divided appropriately to the shareholdings. However, it should be borne in mind that any potential uncovered losses within the limited liability company from the previous year should be covered at the time of the distribution of profit. 

Distribution of profit in a joint-stock company

In the joint-stock company profit in the form of a net financial result is paid in proportion to the number of shares held by the shareholders. Unlike in the case of limited liability companies, in a joint stock company not all the profit can be allocated for one purpose - 8% of profit should be transferred to the reserve capital until the moment it reaches 1/3 of the share capital. In addition, the Ordinary General Meeting is authorized to set up new reserve funds, which will be financed from the profit generated in the given financial year.

Distribution of profit in a genarl partnership company

In the general partnership, regardless of the type and amount of contribution, all partners equally participate in the distribution of profit from the gross financial result. Profit may be paid as soon as the financial year has ended. In the case of a loss being posted any potentially reduction in capital is increased from the profit earned. Furthermore, regardless of the financial result, the partners may each receive 5% interest on their share of the contributed capital each year.

Distribution of profit in a civil law partnership company

In the civil law partnership company the distribution of profit from the gross financial result is made after its dissolution, provided that it is fixed for a definite period of time. Otherwise, if the partnership is created for an indefinite period, the distribution of profit may take place directly upon the end of the financial year. Profit is divided equally between partners regardless of the contributions made, unless the partnership agreement provides for a different distribution of profit. If the partnership agreement or a resolution so provides, in the course of the financial year, the partners may make advance payouts against the annual result.

Distribution of profit in alimited partnership company

In the limited partnership the gross financial result is shared appropriately to the contribution made by the limited partner if the contract does not indicate otherwise. The earned profit first raises the amount of contribution contributed upto the amount of the contribution declared, and can only be paid out after this.

Distribution of profit in a joint-stock limited partnership company

In the joint-stock limited partnership the financial gain in the form of the gross financial result is divided between the general partners and the shareholders in proportion to the contribution they made, unless otherwise stated in the articles of association. In order to divide the profit, the resolution must be adopted by a majority of the partners.

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