Reserve capital is an integral part of the organization's own capital, along with the authorized and additional capital. Reserve capital is accounted for on account 82 “Reserve capital”.
This type of capital is mandatory only for joint stock companies; all other organizations can create a reserve at their discretion.
Legal basis for the formation and use of reserve capital
In accordance with paragraph 1 of Art. 35 of the Law on JSC, joint-stock companies are required to create a reserve fund in the amount provided for by the company’s charter, but not less than 5% of its authorized capital. The reserve fund of a joint-stock company is formed through mandatory annual contributions until it reaches the size determined by the charter of the joint-stock company. The amount of annual contributions is provided for by the charter of the joint-stock company, but cannot be less than 5% of net profit until the amount determined by the charter of the joint-stock company is reached.
