NET WORTH DEFINATIONS

1. SECTION 2 (57) OF COMPANIES ACT 2013 ―net worth means the

aggregate value of the paid-up share capital and all reserves created out of
the profits and securities premium account, after deducting the aggregate
value of the accumulated losses, deferred expenditure and miscellaneous
expenditure not written off, as per the audited balance sheet, but does not
include reserves created out of revaluation of assets, write-back of
depreciation and amalgamation;

2. Net-worth’ will consist of ‘paid up equity capital, free reserves, balance in

share premium account and capital reserves representing surplus arising
out of sale proceeds of assets but not reserves created by revaluation of
assets’ adjusted for ‘accumulated loss balance, book value of intangible
assets and Deferred Revenue Expenditure, if any’. This definition would
apply for the purpose of all approvals under the PSS Act.1

3. SECTION 3(ga) THE SICK INDUSTRIAL COMPANIES (SPECIAL

PROVISIONS) ACT, 1985 – “ net worth” means the sum total of the paid-
up capital and free reserves.

Explanation.—For the purposes of this clause, “free reserves” means all reserves
credited out of the profits and share premium account but does not include reserves
credited out of re-evaluation of assets, write back of depreciation provisions and
amalgamation;

1
https://www.rbi.org.in/scripts/RTGS_Notification.aspx?Id=9490
 4. THE COMPANIES (AMENDMENT) BILL, 2016 - “net worth” means the
aggregate value of the paid-up share capital and all reserves created out of
the profits and securities premium account and debit or credit balance of
profit and loss account, after deducting the aggregate value of the
accumulated losses, deferred expenditure and miscellaneous expenditure not
written off, as per the audited balance sheet, but does not include reserves
created out of revaluation of assets, write-back of depreciation and
amalgamation.2

5. REGULATION 2 ( v ) SECURITIES AND EXCHANGE BOARD OF

INDIA (ISSUE OF CAPITAL AND DISCLOSURE REQUIREMENTS)
REGULATIONS, 2009 ―net worth means the aggregate of the paid up
share capital, share premium account, and reserves and surplus (excluding
revaluation reserve) as reduced by the aggregate of miscellaneous
expenditure (to the extent not adjusted or written off) and the debit balance
of the profit and loss account;

6. REGULATION-2(1)(s) OF SECURITIES AND EXCHANGE BOARD OF

INDIA (LISTING OBLIGATIONS AND DISCLOSURE
REQUIREMENTS) REGULATIONS, 2015- “net worth” means net worth
as defined in sub-section (57) of section 2 of the Companies Act, 2013

2
https://taxguru.in/company-law/definitions-ca-2013-companies-amendment-bill-2016.html