One definition feeds half the thresholds in company law — Ind AS applicability, CSR, XBRL filing, small-company tests. And it is not the balance-sheet equity figure: revaluation reserves are out, write-backs are out, and three deductions apply.
Sec 2(57) counts only capital, securities premium and reserves created out of profits — then subtracts accumulated losses and unamortised fictitious assets. A company carrying a ₹40 crore revaluation reserve shows equity ₹255 crore but net worth ₹215 crore: below the Ind AS line, not above it. The exclusions decide real applicability calls, which is why the computation belongs in a working paper, not a mental estimate off the balance sheet.
Net worth = aggregate of paid-up share capital, all reserves created out of profits, and securities premium — LESS accumulated losses, deferred revenue expenditure and miscellaneous expenditure not written off — all per the audited balance sheet. Reserves created out of revaluation of assets, write-back of depreciation and amalgamation are expressly excluded.
The definition is the reference point for a family of thresholds: Ind AS applicability (₹250 crore for unlisted companies), CSR (₹500 crore net-worth trigger, alongside turnover and profit triggers), XBRL filing (₹500 crore), and various small-company and exemption tests. Each threshold statute specifies its own reference date/year — document which audited balance sheet was tested.
Under Ind AS itself the composition of "other equity" gets more complex (OCI reserves, ECL impacts) — the conservative practice is to include only items that are in substance profit-derived reserves, and to disclose the computation where a threshold call is close. On transition, net worth can swing enough to change the answer, which is how companies get pulled into Ind AS by their own first-time adoption.
An unlisted company shows: capital ₹10 cr, securities premium ₹25 cr, general reserve + retained earnings ₹180 cr, revaluation reserve ₹40 cr, deferred revenue expenditure ₹2 cr, misc expenditure ₹1 cr.
