2019 UEM Edgenta Annual Report

236 Notes to the Financial Statements For the year ended 31 December 2019 35. OTHER RESERVES (CONT’D.) (b) Statutory reserve In accordance with the United Arab Emirates (“UAE”) Commercial Companies Law, 10% of profit for each year from a Limited Liability Company incorporated in the UAE is transferred to a legal reserve until such time as the reserve equalled 50% of the paid-up capital. Faber L.L.C. (“FLLC”) has resolved to discontinue such annual transfers since the reserve has equalled to 50% of its share capital. This reserve is not available for distribution except as stipulated by UAE law. (c) Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign operations whose functional currencies are different from that of the Group’s presentation currency. It is also used to record the exchange differences arising from monetary items which form part of the Group’s net investment in foreign operations, where the monetary item is denominated in either the functional currency of the reporting entity or the foreign operation. (d) Other reserve Other reserve arose from the redemption of redeemable preference shares in prior years by a subsidiary. 36. RETAINED EARNINGS The Company may distribute dividends out of its entire retained earnings under the single tier system.