1. Ten (10%) percent of the Company’s net profit shall be deducted annually and allocated for legal reserve formation.

2. The General Assembly may suspend such deduction whenever legal reserve balance reaches fifty (50%) of the Company’s paid-up capital.

3. The legal reserve balance shall not be distributed as profits among shareholders. However, any excess above the fifty (50%) percent of the Company’s paid-up capital in legal reserve may be allocated for distribution among shareholders in the years where the Company fails to achieve net distributable profits.