Bhavin (Service) (192 Points)
07 July 2011Dear Users,
Please Answer the following question with supportings ASAP.
Whether Convertible Preference Shares (convertible into equity shares at a future date) are to be included in the net worth of the company (As Preference Shares or Equity Shares) ???????
Please Help !!!!!!!!!!!!!!!
Arvind Sharma
(ACA)
(1432 Points)
Replied 07 July 2011
| Originally posted by : Bhavin | ||
 |
Dear Users, Please Answer the following question with supportings ASAP. Whether Convertible Preference Shares (convertible into equity shares at a future date) are to be included in the net worth of the company (As Preference Shares or Equity Shares) ??????? Please Help !!!!!!!!!!!!!!! |
 |
Net Worth of a Company is not defined anywhere., except u/s Sec 2(29A) of the Companies Act, 1956 which is as below:-
Section 2(29A)
"net worth" means the sum total of the paid-up capital and free reserves after deducting the provisions or expenses as may be prescribed.
Explanation.-For the purposes of this clause, "free reserves" means all reserves created out of the profits and share premium account but does not include reserves created out of revaluation of assets, write back of depreciation provisions and amalgamation;]
Thus, Preference Share Capital will also form part of Net Worth...
CAclubindia
