Jamjoom Pharma shifts SAR 67M statutory reserve to retained earnings

Jamjoom Pharmaceuticals Factory Co. (Jamjoom Pharma) shareholders approved the transfer of SAR 67.13 million from the company's statutory reserve to retained earnings during an extraordinary general meeting, the company said.

The statutory reserve is a legal requirement under Saudi corporate regulations. Companies allocate a percentage of annual net profit to this reserve until it reaches a specified threshold relative to share capital. Once that threshold is met, shareholders can vote to move the balance to retained earnings, where it becomes available for general corporate purposes.

Jamjoom Pharma's statutory reserve had accumulated to SAR 67.13 million. The transfer increases the company's distributable reserves without any cash outlay. Retained earnings are the primary source for dividend payments, share buybacks, and reinvestment into the business.

The company did not disclose a specific use for the freed-up capital. The move gives management greater flexibility in capital allocation. The transfer is effective immediately and does not change total equity, only its composition. Retained earnings are a more flexible account than the statutory reserve, which carries restrictions on use.

Jamjoom Pharma's next annual report will reflect the higher retained earnings balance.