The nominal/par value per share
| All companies having a share capital are required to state (in their memorandum of association) the amount of the initial share capital (i.e. the 'authorised' or 'nominal' capital) and the division of the share capital into shares of a fixed price - section 2(5) of the Companies Act 1985. The authorised capital is an arbitrary amount, chosen by the company from time to time. For example, the authorised capital may be £10 million and the company may decide that this share capital will be divided into 10 million ordinary shares of £1 each. In this example the 'nominal' or 'par' value of each share in the company is £1. The nominal/par value may be any fraction of the authorised/nominal capital, e.g. it may be as low as one penny or it may be £100 or more. So, in the example just given, the company may alternatively have decided to divide the share capital into, say, 100,000 shares of £100 each
The nominal/par value of a share does not necessarily bear any relationship to its real value. In fact the nominal/par value of a share can be vastly different from its real value. For example, for most of the 1990's the real value of British Telecom's shares was no less than £5 and yet their nominal/par value was £1. The real value of a company's shares rises and falls depending upon the fortunes of the company from time to time, irrespective of its fixed nominal/par value.
If it is proposed that the nominal/par value per share will be only 0.01 (in whatever currency) you should be aware that UKcorporator is designed not to allow users to stipulate (in answer to a later question) that such shares will initially be partly paid (as opposed to fully paid). |
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