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    CA Certification

    Net Worth Certificate for Company

    A chartered accountant's certificate of your company's net worth as section 2(57) of the Companies Act 2013 defines it: paid-up capital and the reserves that count, less the deductions, read from the audited balance sheet and signed with a UDIN for the lender, tender authority or regulator that asked for it.

    • UDIN on every certificate, checkable on the ICAI portal

    Written by Subham JhunjhunwalaReviewed by CA Sundram GuptaReviewed on Updated Sources: Companies Act 2013, section 2(57); ICAI Guidance Note on Reports or Certificates for Special Purposes (Revised 2016); ICAI UDIN portal

    A company CFO listening as a chartered accountant explains the company's net worth in his glass cabin
    The statutory formulaSection 2(57) of the Companies Act 2013 decides what counts. A company's net worth is not a choice of method.
    Addedwhat the definition aggregates
    • Paid-up share capital
    • All reserves created out of profits
    • Securities premium account
    • Debit or credit balance of the profit and loss account
    Deductedwhat comes off the aggregate
    • Accumulated losses
    • Deferred expenditure not written off
    • Miscellaneous expenditure not written off
    Never countedreserves the definition excludes
    • Reserves created out of revaluation of assets
    • Reserves from write-back of depreciation
    • Reserves arising on amalgamation
    • Read from the audited balance sheet · the figure speaks to that date, not to the day of signing
    • Of the company as a legal person · not its promoters, directors or group
    Professional fee · Starting from INR 1,999 (Exl GST and Govt. Charges)

    In short

    What a company net worth certificate is (section 2(57))

    For a company, net worth is a defined term. Section 2(57) of the Companies Act 2013 aggregates the paid-up share capital, all reserves created out of profits, the securities premium account and the balance of the profit and loss account, deducts accumulated losses and any deferred or miscellaneous expenditure not yet written off, and reads every figure from the audited balance sheet. Reserves created by revaluing an asset, writing back depreciation or amalgamating are outside it, however they are named in the accounts.

    A company net worth certificate is a chartered accountant's written confirmation of that figure, for the company as a legal person, as at the date of the balance sheet it was read from, addressed to the lender, tender authority, regulator or counterparty that asked for it, with the working annexed so the reader can follow each line back to the accounts. It is not the same question as how much of the reserves is distributable: free reserves are a different test, and a reserve can count toward net worth without being free.

    Three limits of the figure

    1. Standalone, unless consolidated is asked forThe company's own balance sheet. Group strength is a separate computation on the consolidated accounts, and the certificate says which one it is.
    2. As at the balance sheet dateThe certificate is dated when it is signed, but the figure belongs to the audited balance sheet it came from, and the certificate says so.
    3. A figure, not an opinion on the companyIt says nothing about solvency, going concern, or whether the company can meet a particular obligation. A reader who wants those asks for a different document.

    Who is asking?

    Who asks a company for one

    The balance sheet is signed and filed, but nobody has restated it as one figure under the statutory definition. The person asking wants that number, not the accounts it comes from. Pick who asked: the row says what they read the figure against, what they set, and what to send us so the certificate is written to their file the first time.

    A lender sizing a facility

    Term loan, working capital limit, renewal or enhancement in the company's name
    Reads the figure against

    Its own sanction norms and the borrowing already on the balance sheet. A lender usually reads the reserve lines before the total, because an uplift on property counted as a reserve is the first thing a credit note strips back out.

    Sets

    The balance sheet date it will accept, whether it wants the promoters' personal certificates alongside, and sometimes the consolidated position of the group.

    Send us

    The bank's document list and the sanction or renewal letter, so the date and any companion certificate come from the bank's own file.

    A tender authority reading an eligibility clause

    Government works, PSU supply, e-procurement bids in the company's name
    Reads the figure against

    The minimum its clause names. Whether the company clears it depends on which reserves count, and that is settled before anything is drafted. Where the clause wants the company shown good for a stated sum rather than its net worth reported, a tender committee is asking for a solvency certificate, which is a different document.

    Sets

    The financial year, how recent the accounts must be, usually that they are audited, and the format where the bid document prescribes one. None of it carries over from the last bid.

    Send us

    The bid document open at the eligibility and document pages, so the certificate is written to the clause and not to an assumption.

    A regulator or registering authority

    A licence, registration or periodic filing that names a net worth test for the company
    Reads the figure against

    The test in its own regulations, which may define the figure differently from section 2(57). An NBFC's regulator, for example, reads the company's net owned fund, a separate computation that this certificate does not answer.

    Sets

    Its own form, cycle and basis, and often that the certificate names the regulation it is issued under. A periodic filing wants the same basis year after year so movements can be explained.

    Send us

    The regulation or circular that sets the test and the last filing made under it, so the certificate is written on the basis the authority already knows.

    A counterparty doing its own diligence

    A customer onboarding a vendor, a landlord, a franchisor, a joint-venture partner
    Reads the figure against

    Its own comfort level and the size of the contract. A counterparty rarely has a formula, so it relies on the statutory one and on the working annexed to the certificate to see how the total was reached.

    Sets

    Very little, which is the difficulty: the date and basis are then agreed with the counterparty before the engagement starts, so the certificate is not returned for a different one.

    Send us

    The email or onboarding form that asked for the certificate, with any date or period it mentions.

    A director's fit-and-proper declaration is not this certificate.

    Where a regulator asks a director for their net worth alongside the company's, that is a personal certificate on personal records, prepared and dated separately. What the regulators look for, and why the company's certificate does not answer it, is in Director Fit-and-Proper: Net Worth Requirements Explained.

    Where the figure comes from

    How the figure is built from the audited accounts

    The audited accounts hold the inputs but not the answer, because a balance sheet does not present net worth in the statutory form. Someone has to sort every reserve by how it arose and apply the deductions, and that sorting is where most in-house workings go wrong. This is the sorting without the arithmetic; the arithmetic, with worked figures, is in how a private company's figure is built, and the company calculator applies it to your own numbers: Open the full calculator ↗

    CountedSorted by origin, not by the name on the schedule
    • Paid-up share capital, confirmed against the register of members and the allotment filings, never the subscribed figure
    • General reserve, retained earnings and any other reserve built by setting profits aside, whatever the schedule calls it
    • The securities premium account, as it stands in the audited balance sheet
    • The profit and loss account balance, a credit adding to the aggregate and a debit reducing it
    A reserve created out of profits counts toward net worth whether or not it is available for dividend. That is the definition of net worth in section 2(57) of the Companies Act, 2013: it counts all reserves created out of the profits, and leaves out reserves created out of revaluation of assets, write-back of depreciation and amalgamation.
    DeductedWhat the definition takes off
    • Accumulated losses carried in the balance sheet
    • Deferred expenditure not yet written off
    • Miscellaneous expenditure not yet written off, where the accounts still carry any
    • Share application money pending allotment is not capital and does not enter the aggregate; it is disclosed separately so the reader can see it
    Where accumulated losses have eaten through the reserves and into the capital, the figure is negative and the certificate says so; what that means for the company is in Negative Net Worth: What It Means for a Company, and the pattern itself is net worth erosion.
    Set asideIn the accounts, outside the definition
    • A revaluation reserve: an uplift taken on property or plant sits in the reserves like any other and travels into a careless total unnoticed
    • A reserve from writing back depreciation
    • A reserve arising on amalgamation, including the capital reserve left after a merger; a slump sale or other restructuring is read for the same reason
    Each exclusion is identified in the working, so the reader sees what was taken out and on what authority. Left in, it produces a number the reader can disprove from the same balance sheet.
    1. Which balance sheet

      The definition reads the figure from the audited balance sheet, so the engagement starts from signed audited statements, and the certificate speaks to their date. Where a reader wants a later date, or the first year's accounts are not yet audited, the working starts from the books at that date, the movements since the last audited balance sheet are verified, and the certificate states on its face that the figures are unaudited and which date they are drawn to. Most readers accept that where the gap is short; the certificate never leaves them to assume.

    2. Standalone or consolidated

      A group produces two sets of accounts and two very different figures, and the request rarely says which one is meant. In the standalone figure the investment in a subsidiary appears at its carrying value; in the consolidated figure the subsidiary's own assets and liabilities come in. We ask the reader which basis it is assessing before drafting, and where it has not said, both are prepared and labelled on their face, so nothing comes back for having answered a question nobody asked.

    3. What the auditor's report says

      A qualification sits in the auditor's report, not in the figures, so a working drawn from the figures alone never meets it. Where the report is modified, how it is disclosed on the certificate is settled with you before drafting and carried on the face of the certificate. A reader who finds the qualification second will doubt both documents, and the question shifts from the figure to why it was left out.

    Two lines readers question most

    Paid-up, not subscribed. The two sit close together in the accounts and differ only by what shareholders have actually paid, which is easy to read past. Paid-up capital is confirmed against the register of members and the allotment filings before it opens the computation.

    A director's loan is a liability. Money a director has lent to the company is owed by the company and sits among its liabilities whether or not it carries interest. Readers often ask separately whether it is subordinated, so the working shows it on its own line.

    Who signs what

    A director signs the statement of affairs the certificate is drawn from, usually under a board authority, and owns its completeness. The chartered accountant's signature attests to the examination performed. Readers generally want both, because a certificate with no company signatory has nothing behind it.

    How it is issued

    How we issue it, step by step

    Six steps from the signed accounts to a certificate with a UDIN. Each step fixes one thing, and the next step cannot start until it is fixed.

    1. The audited accounts are taken up

      We begin from the signed audited financial statements with the auditor's report, not from a trial balance or management figures. Where the reader has asked for a later date than the last audited balance sheet, that is agreed here, and the certificate will say the figures to that date are unaudited.

      Fixed hereThe date the certificate speaks to, and whether the figures are audited or drawn to a later date.
    2. The statutory aggregate is run

      Paid-up share capital is confirmed against the register of members and the allotment filings, then the reserves created out of profits, the securities premium account and the profit and loss balance are added, and accumulated losses and expenditure not written off come off. Each line is tied to the line of the audited balance sheet it came from.

      Fixed hereThe aggregate, line by line, with each line traceable to the accounts.
    3. The excluded reserves are stripped out

      A reserve schedule is built that identifies how each reserve arose. Anything created by revaluing an asset, writing back depreciation or amalgamating is removed from the total, and each removal is shown in the working with the reason, so the reader sees what was taken out rather than wondering whether it was.

      Fixed hereThe exclusions, each named and each visible in the working.
    4. The auditor's report is read against the figure

      Where the report is modified, how the modification is disclosed on the certificate is settled with you before anything is drafted. A qualification that touches the figures cannot be passed over in silence when the certificate rests on those very accounts.

      Fixed hereThe disclosure wording, agreed with you and carried on the face of the certificate.
    5. The basis is confirmed with the reader

      Where the company holds investments in, or has lent to, companies in its own group, we confirm whether the reader asked for the standalone or the consolidated position, and prepare both where it has not said. A director then signs the statement the certificate is drawn from and the written representation that every asset, liability and charge has been disclosed.

      Fixed hereStandalone or consolidated, and the company's own signature behind the statement.
    6. The certificate is signed and a UDIN generated

      A chartered accountant in practice signs the certificate with the full working annexed, generates the UDIN on the ICAI portal and releases both together, so a tender authority or a lender can check the arithmetic rather than take the total on trust.

      You receiveThe signed certificate with its annexed working, and the UDIN for the reader to check.

    What we need from the company

    Documents required

    Everything below is source material, not a summary, because each line of the certificate is traced to the record that governs it. The tag on each record says which line it proves.

    On every engagement

    The records every company certificate is built from
    1. Signed audited financial statements for the latest financial year, with the auditor's report
      The date and the source
    2. Trial balance and general ledger as at the balance sheet date
      Every line
    3. Register of members and the allotment filings confirming paid-up share capital
      Paid-up capital
    4. Schedule of reserves showing how each reserve arose
      Counted or set aside
    5. Securities premium account balance with its movement for the year
      Securities premium
    6. Details of accumulated losses, deferred expenditure and miscellaneous expenditure not written off
      The deductions
    7. CIN and PAN of the company, and the MCA master data as it currently stands
      The company

    Why: the certificate names the company exactly as the register holds it and ties each line of the aggregate to the audited line it came from; a summary cannot do either.

    Where they apply

    Only if the company holds these
    1. Fixed asset register, with any revaluation identified separately
      Set aside
    2. Schedule of investments in, and loans to, group and subsidiary companies
      Basis
    3. Memorandum and articles of association, where borrowing powers or transfer restrictions bear on the figures
      The company

    Why: a revaluation and a group holding are the two things that most often change the certified figure, and each has to be seen in the record, not described.

    The reader's own paper comes first

    The sanction letter, the bid document or the regulation that asked for the certificate is read before any of the above, because it sets the date, the basis and the format everything else is prepared to.

    What it contains

    What the certificate states

    A search for a format or a Word template usually wants to know what the document will say and what the reader will see. A company's certificate is two documents that must agree: the certificate itself, and the working annexed to it. This is what each states, in the order it is read.

    1
    The certificateOne page, addressed to the reader who asked for it
    1. Addressee and purposeThe lender, authority, regulator or counterparty it is issued to, and the facility, bid, filing or contract it is for. Reliance by anyone else is excluded.
    2. The companyIts name exactly as the register holds it, its CIN, and its registered office.
    3. The accounts it rests onThe audited financial statements for the stated year, and whether the auditor's report on them is unmodified or carries a qualification that the certificate then sets out.
    4. The basisStandalone or consolidated, stated once in the opening paragraph so the reader is never left to infer it.
    5. The opinionThat the net worth of the company, computed under section 2(57) of the Companies Act 2013 as at the balance sheet date, is the stated figure, in figures and in words, as set out in the annexed working.
    6. Basis and limitationThe records examined, the director's written representation, the ICAI guidance followed, and what the certificate is not: not an opinion on solvency or going concern, not a valuation, not an opinion on any later date.
    7. Signature and UDINThe chartered accountant's signature, firm registration number, membership number, place, date, and the UDIN the reader checks on the ICAI portal.
    2
    The annexed workingWhere the figure is shown being built

    A. Extract from the audited balance sheet

    • Assets by head: property, plant and equipment, capital work-in-progress, investments, inventories, receivables, cash and bank, other assets
    • Liabilities by head: long-term and short-term borrowings, trade payables, other liabilities and provisions

    B. Computation under section 2(57)

    • Paid-up share capital
    • Reserves created out of profits, each named
    • Securities premium account
    • Balance of the profit and loss account, credit or debit
    • Accumulated losses; deferred and miscellaneous expenditure not written off
    • Net worth as at the balance sheet date

    C. Reserves set aside

    • Each revaluation, depreciation write-back or amalgamation reserve, named, with the amount left out of the total

    Where the company holds investments in or has lent to group companies, a schedule of those balances is annexed as well, because a tender authority reads it before it accepts the headline total.

    There is no template to download, because every line above changes with the company, the accounts, the basis and the reader. What stays constant is the structure, and the fact that the certificate and the working carry the same figure.

    Two certificates, two questions

    Company net worth vs the promoter's personal net worth

    A lender assessing an unsecured facility often wants both, because the company's certificate shows the business and the promoter's shows what stands behind it. They are different certificates on different records, and often different dates.

    The company
    The promoter
    Whose position
    The company as a separate legal person, with its own assets and borrowings.
    The individual behind it, including holdings that have nothing to do with the business.
    Which records
    The signed audited financial statements, on the statutory definition.
    Personal records: returns, bank statements, title deeds and depository statements.
    How the figure is built
    Section 2(57): reserves sorted by origin, the deductions applied, revaluation, write-back and amalgamation reserves set aside.
    No statutory formula. Assets less liabilities, with the basis for each asset disclosed on the certificate instead.
    Who asks for it
    Tenders, regulators, credit assessment of the business itself.
    Where the promoter stands behind the borrowing personally, visa files, and wherever a lender wants the person behind the company.
    Neither substitutes for the other.

    The company's certificate says nothing about whether the promoter could support the company, and the promoter's cannot satisfy a tender or a regulator assessing the entity. For the promoter's own certificate, see the net worth certificate for an individual.

    Professional basis

    The professional basis

    Unlike an individual's position, a company's net worth is defined by statute. What governs the certificate is that definition, the professional framework a chartered accountant issues it under, and the number that lets a reader check who signed it.

    Section 2(57), Companies Act 2013

    Sets the formula exactly: what is aggregated, what is deducted, what is never counted, and that the figures are read from the audited balance sheet. That is why the engagement begins with signed accounts and not with a trial balance.

    ICAI Guidance Note on Reports or Certificates for Special Purposes (Revised 2016)

    The guidance a chartered accountant follows when certifying financial information for a named purpose: what is examined, the written representation taken from the company, and how the basis, the limitations and a modified auditor's report are stated. There is no separate ICAI guidance for net worth certificates; this is the one that applies.

    UDIN on every certificate since 1 February 2019

    The Unique Document Identification Number is generated by the signing chartered accountant on the ICAI portal for each certificate. A company's certificate without one is not a chartered accountant's certificate, whatever letterhead it sits on.

    How your reader checks the signature

    The credit officer or committee member enters the UDIN on the ICAI UDIN portal and sees the signing member, the date and the document type, without contacting the company or us.

    How your reader checks the figure

    The annexed working lets them follow the computation from paid-up capital to the certified figure, line by line, against the audited balance sheet the company has already given them.

    Fee

    Fee

    One fee for one certificate, speaking to one balance sheet date, with the working annexed. The state of the reserve schedule and whether there is a group to trace decide the scope, and the scope is known from the audited accounts.

    Professional fee

    Starting from INR 1,999 (Exl GST and Govt. Charges) Exclusive of GST and government charges · one company, one date, working annexed

    The starting fee covers one company with signed audited accounts, a reserve schedule that already shows how each reserve arose, and no group holdings to trace. It is quoted in writing after the accounts and the reader's request have been read, before any work starts.

    Fees are indicative until confirmed in writing for your engagement. The final fee depends on the records to be examined.

    • Group companies to traceInvestments in and loans to group entities, or a consolidated position beside the standalone one, add a schedule and a second computation. Quoted on that scope.
    • A reserve schedule to rebuildWhere the accounts do not show how each reserve arose, the schedule is reconstructed from prior years before anything can be sorted. That work is agreed and quoted separately, before it starts.
    • A modified auditor's reportAgreeing the disclosure wording and carrying it on the certificate is additional work on the report, not on the figures. Quoted once the report has been read.
    • The company and its promoter togetherLenders assessing an unsecured facility frequently ask for both. Each is its own engagement on its own records, quoted on its own. A later balance sheet date is likewise a fresh certificate; the first is never re-dated.

    Related certificates, guides and tools

    Related certificates, guides and tools

    Where the request in front of you is not quite this certificate, one of these usually is.

    • If the reader wants the promoter, not the companyNet worth certificateFor an individual: assets less liabilities as one figure, with the basis for each asset disclosed, signed with a UDIN.
    • If a bank is sizing a facilityNet worth certificate for a bank loanWhat a credit team checks, and what sits beside the company's certificate in a sanction file.
    • If the clause names a sumSolvency certificateWhere a tender or a court wants the company shown good for a stated amount rather than its net worth reported as a figure.
    • If the company is an NBFCNet owned fund certificate for an NBFCThe Reserve Bank's own test for an NBFC, computed on its own rules; a different figure from section 2(57), and a different certificate.
    • If a real-estate authority is askingNet worth certificate for a RERA promoterFor a promoter registering a project, where the authority's form asks for one; that page says which entity's figure is read.
    How to Calculate Net Worth of a Pvt Ltd CompanyThe computation itself, with worked figures: each reserve sorted, the deductions applied, the exclusions shown.
    Director Fit-and-Proper: Net Worth Requirements ExplainedWhich regulators ask a director for a personal figure, and why the company's certificate does not answer them.
    Negative Net Worth: What It Means for a CompanyWhat a certificate says when losses have consumed the reserves and the capital, and what readers do with it.

    Terms used on this page

    Company net worth calculatorEnter paid-up capital, the premium account and each reserve by how it arose; it applies the section 2(57) additions and deductions and shows what is set aside. An estimate from the figures you enter; it carries no UDIN.
    Net Worth CalculatorFor the promoter's own figure, where a lender wants it beside the company's: assets less liabilities from the figures you enter.

    Start your company net worth certificate

    Send the audited accounts and tell us who is asking

    A company's figure is fixed by its audited accounts, so the decision in front of you is narrower than it looks: which set of accounts, and whether the reader wants the standalone or the consolidated position. Send both answers and a CA confirms what the computation will show before you commit to anything.

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      Have these ready

      • The signed audited accounts with the auditor's report
      • The schedule of reserves, showing how each arose
      • The CIN and the MCA master data
      • The reader's document list, clause or regulation

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      What happens next

      A CA reads the audited accounts and the reader's request, confirms the date and the basis, lists the records needed and sends the fee in writing before the engagement starts.