20.2 Reserve capital

Supplementary capital results from statutory allocation of profits generated in previous reporting periods, from surplus of profit distribution in excess of the value of statutory allocations, as well as from merger of PGE S.A. with its subsidiaries.

According to regulations of the Commercial Code, joint stock companies are obliged to create reserve capital to cover potential losses. At least 8% of the profit for the reporting year recognised in the Company’s separate financial statements until this capital reached at least one-third of share capital. The part of supplementary capital which amounts to one third of share capital can only be used to cover losses recognised in the separate financial statements and cannot be distributed for other purposes. The General Meeting decides on the use of supplementary and reserve capital.

Reserve capital subject to distribution to shareholders amounted to PLN 18,654 million as at December 31, 2022 and to PLN 13,766 million as at December 31, 2021.