what is face value of share

Face value of a share is the nominal (original) value that a company assigns to each share when it is created, mainly for accounting and legal purposes, not for trading.

Simple definition

• Face value (also called par or nominal value) is the value printed on the share certificate or specified in company documents at the time of issue.

• Common face values in India are ₹1, ₹2, ₹5, or ₹10 per share.

Example: If a company issues 1 lakh shares with equity share capital of ₹10 lakh, the face value per share is ₹10.

Formula

Face value of a share:

Face Value=Equity Share CapitalTotal Number of Shares Issued\text{Face Value}=\frac{\text{Equity Share Capital}}{\text{Total Number of Shares Issued}}Face Value=Total Number of Shares IssuedEquity Share Capital​

This tells you how much nominal capital each share represents in the company’s books.

Face value vs market price

• Face value stays mostly constant and changes only through actions like stock splits or consolidation.

• Market price keeps changing every day based on demand, supply, company performance, and market sentiment.

• You buy and sell shares at the market price, not at face value.

Why face value matters

• Dividends: Many companies declare dividends as a percentage of face value (for example, 50% dividend on a ₹10 face value share = ₹5 per share).

• Stock splits: When a share is split (say from ₹10 to ₹5 face value), the number of shares increases but total investment value initially remains the same.

• Accounting: Face value is used to calculate total share capital and appears on the balance sheet.

Information gathered from public forums or data available on the internet and portrayed here.