Page 13 - LILITED LIABILITY COMPANIES - INTERMEDIATE

COMPANY ACCOUNTING SESSION 14

1.10 SHAREHOLDERS' FUNDS

Shareholders' funds are represented by the net assets of a company and comprise the called-up share
capital and the reserves. Loan capital is not included in shareholders' funds.

Reserves are profits of a company not distributed to the shareholders. Reserves fall into two categories:

Non-distributable reserves.

These reserves are built up, not out of ‘earned’ profits, but from various adjustments to the capital
structure of the company or from the revaluation of non-current assets. As the name suggests, they are
not available for payment of dividends. These may include:

o share premium account;

Distributable reserves.

These reserves are built up from ‘earned’ profits not distributed to shareholders. They are an
appropriation of distributable profits for a specific or general purpose. These may include:

o general reserve (general)
o retained profits (general)

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