As set out in the IRANI Bylaws, after the calculation of the year’s net income, there will be deducted, before any participation, the accumulated losses, if any, and the provision for income taxes.
After these deductions, there may be deducted, at the discretion of the Board, the involvement of the employees in the profit and the share of the Company’s management, the latter to an amount not exceeding 10% (ten percent) of the profits, or their annual salary, if this limit is lower. The administrators will only be entitled to a share in profits for the fiscal year for which the obligatory dividend is being attributed and in accordance with specific deliberations of the Board of Directors.
The resulting net profit, after previous deductions, will be reduced or increased by the following values foreseen under the law: (i) 5% (five percent) for the Legal Reserve and (ii) the amount allocated to the formation of reserves for contingencies and the reversal of these reserves that were established in previous years. The Company will retain in the account of the Statutory Reserve of the Biological Assets Values to be fulfilled on the initial adoption of the Fair Value of Biological Assets for IFRS purposes (CPC 29). There will be no new constitutions of this reserve, so there will be no annual portion of the profit to be made as provided in Article 194, paragraph II, of Law No. 6404. It will be carried out by the exhaustion value of the fair value of the initial acceptance of the biological assets, calculated each year and free from taxes. The value achieved each fiscal year will be transferred to Accumulated Profits or Losses for allocation. The Biological Assets Reserve shall not exceed the joint stock value. The net income will also be adjusted (i) for conducting the Revaluation of the Reserve, (ii) the realization of the Biological Reserve Assets and (iii) the realization of the account on behalf of the Equity Evaluation Adjustment.
The adjusted resulting net profit will be distributed to all shareholders, as mandatory dividends, of an amount not less than 25% (twenty five percent)
The Board of Directors may approve, “ad referendum” of the general meeting, the payment or crediting of interest to shareholders by way of return on equity capital, observing the applicable legislation. The amount of interest paid or credited to shareholders as remuneration of equity, may be imputed by the net value of income tax at source, by the value of obligatory dividend as set forth above.
In the year in which the amount of the obligatory dividend, calculated under above, exceeds the amount of realized net income for the period, the General Assembly may, upon proposal of the management bodies, allocate the surplus to an unrealized profits reserve.
The portion of net profit is considered as being realized, that exceeds the sum of the following values:
a) the resulting positive net income by the equity method, and ;
b) profit, gain or income in operations where the financial realization term occurs after the end of the following fiscal year.
The profits recorded in the unrealized profits reserve, when realized and if they have not been not absorbed by losses from subsequent years should be added to the first dividend declared after its realization.
The share of profits that remain after the deductions provided for in Articles 23 to 27 of the Company Bylaws, will be transferred to a Reserve for Investment, that will integrate the Current or Permanent Assets of the Company.
The balance of this reserve, together with the other profit reserves, cannot exceed the paid up share capital; when this limit is reached, the Assembly will decide on the application of the surplus in the integration or capital increase, or the distribution of additional dividends to all shareholders.
The Board of Directors may declare “ad referendum” of the Assembly dividends on account of profits earned on the quarterly or semiannual balance sheet or for shorter periods. When the declared dividends represent a percentage not less than the compulsory, the Board of Directors may authorize, “ad referendum” of the Assembly, the proportional participation to the administrators, observing the legal limits.
The Board may at any time, declare interim dividends ‘on account’ of accrued profits or profit reserves existing on the last annual or biennial balance sheet.