Explanation of Article 536
The article clarifies the ruling regarding the method of profit distribution and the time of its entitlement, and that the partners have the right to agree on the method of profit distribution and the dates of its entitlement. The article also specifies the condition for profit distribution, which is the safety of the capital. The basis for this condition is clear, as there is no profit unless the capital is intact, and what is distributed before confirming the safety of the capital is not subject to the rules of profit. This is because a partner cannot have a profit from the company before settling the debts. The way to verify the safety of the capital is to follow the necessary technical methods and standards to ensure this, while observing the general rules in this regard. When the time set by the partners for profit distribution arrives, the safety of the capital is verified, and once its safety is confirmed, what exceeds the capital is distributed among the partners according to each one's share or agreement as the case may be. The article indicates that the method of profit distribution and the dates of its entitlement are not without two scenarios. The first scenario: the partners agree on the method of profit distribution and the dates of its entitlement, in which case the agreement governs this. The second scenario: the partners do not agree on the method of profit distribution and the dates of its entitlement, in which case it occurs upon the termination of the company, unless there is a custom to the contrary.
Related To
Article 536
Partners may agree on the manner of distributing dividends and the due dates thereof, provided that such distribution takes place upon verification of the integrity of the company’s capital.