Nominal Value
/ˈnɒmɪnəl ˈvæljuː/
Nominal value is the fixed face value assigned to a company's shares at incorporation, which represents the minimum price at which those shares can be issued.
Nominal value is the fixed face value assigned to a company's shares at incorporation, which represents the minimum price at which those shares can be issued.
Nominal value is the official par value printed on share certificates that establishes the minimum legal price per share.
This value remains constant regardless of the company's actual market worth or trading price.
Most founders set a low nominal value like £0.01 or €0.01 per share to maintain flexibility.
Companies cannot issue shares below their nominal value, making this the legal floor price.
However, shares can be sold above nominal value, with the excess called "share premium."
This structure protects creditors whilst allowing companies to raise capital at market rates.
Nominal value is basically the "face value" of your company's shares.
It decides the minimum amount of money your company needs to keep as capital.
When you pay out profits to shareholders, you usually calculate this as a percentage of the nominal value.
If you choose sensible nominal values early on, it makes things much easier when you later try to raise money from investors.
Yes, nominal value can be altered through special resolution and filing requirements with the relevant company registry.
Companies can subdivide shares (reducing nominal value) or consolidate shares (increasing nominal value).
However, these changes require shareholder approval and proper documentation.
Issuing shares below nominal value is illegal and creates personal liability for directors.
The company must collect the shortfall from shareholders, and directors may face penalties.
This rule protects creditors by ensuring minimum capital contributions.
Nominal value has no direct relationship to company valuation or market price.
A company with £0.01 nominal value shares can be worth millions if investors pay significant share premiums.
Market valuation depends on business performance, growth prospects, and investor demand.
Most founders choose very low nominal values (£0.01 or similar) to minimise administrative burdens and maintain flexibility.
Low nominal values reduce minimum capital requirements, simplify accounting, and allow easier share splits or employee share schemes without complex restructuring.
