Net worth of a company is the value of the assets a company owns, minus the liabilities they owe. It is an important metric to gauge a company’s health and value, providing a useful snapshot of its current financial position. The concept of Networth becomes more relevant in ascertaining transactional values in an amalgamation, specifically when one has to arrive at the swap ratios.
But, whether the Preference shares form part of Networth, is an issue that gains relevance whenever one has to ascertain a company’s Networth for the purpose of any transaction whatsoever. In this Article we will see the manner in which the Companies Act, 2013 included convertible Preference shares into Networth.