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Converting negative net worth into positive - how?

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Vivek

student

27 Points Posted on 08 November 2016

Hi,

A running pvt ltd co. has authorized share capital of inr 1.0 lakh. Its balance sheet shows negative reserves and surplus (about inr 3 lakh). The networth is negative. What steps need to be taken to convert the reserves + surplus to positive? Should the authorized and paid-up capital be increased to inr 3 lakh to bring the reserves and surplus to positive? Does this mean that the bank+cash balance always have 3 lakh throughout the year and beyond?

Thanks.

Replies (1)

Rinky Senger

170 Points Posted on 09 November 2016

Increasing the paid up capital for INR 3 lakhs or more will definately make the net worth positive. No, the raised capital can be used for Business operations, for making expenses or buying assets and normal accounting treatments would be done for them. All the complainces for issuing share capital and increasing authorised share capital should be followed.