{"id":769,"date":"2026-07-01T11:34:29","date_gmt":"2026-07-01T11:34:29","guid":{"rendered":"https:\/\/www.incredmoney.com\/knowledge-center\/?p=769"},"modified":"2026-07-03T09:21:23","modified_gmt":"2026-07-03T09:21:23","slug":"what-is-face-value-of-share","status":"publish","type":"post","link":"https:\/\/www.incredmoney.com\/knowledge-center\/share-market\/what-is-face-value-of-share\/","title":{"rendered":"What Is Face Value Of Share?"},"content":{"rendered":"
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Face value of a share, also known as par value or nominal value, refers to the value assigned by a company when shares are initially issued.<\/p>\n

Face value serves as a reference point for accounting entries, dividend declarations, securities premium calculations, and certain corporate actions.<\/p>\n

Unlike market price, face value generally remains unchanged unless modified through stock splits, share consolidation, or other corporate actions.<\/p>\n

What Is The Formula Of Face Value?<\/h2>\n

Face value is calculated by dividing a company’s total equity share capital by the total number of outstanding shares. It represents the foundational accounting value of a single share, completely independent of its current market trading price.<\/p>\n

The formula used for calculating face value is:<\/p>\n

Face Value = Equity Share Capital \u00f7 Outstanding Shares<\/strong><\/p>\n

Example Calculation<\/h3>\n\n\n\n\n\n\n\n
Particulars<\/th>\nAmount<\/th>\n<\/tr>\n<\/thead>\n
Equity Share Capital<\/td>\n\u20b910,00,000<\/td>\n<\/tr>\n
Outstanding Shares<\/td>\n1,00,000<\/td>\n<\/tr>\n
Face Value<\/td>\n\u20b910<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Illustrative example only.<\/em><\/p>\n

How Does Face Value Of Share Work?<\/h2>\n

Face value, also called par value or nominal value, is the original cost of a share as stated in the company\u2019s charter. It serves as a reference measure for accounting purposes and corporate actions.<\/p>\n

While market price fluctuates based on demand and supply, face value remains fixed unless changed through corporate actions approved by shareholders.<\/p>\n

Key Roles of Face Value include:<\/h3>\n

1. Dividend Declaration<\/h3>\n

Dividends may be declared as a percentage of face value.<\/p>\n

2. Stock Splits<\/h3>\n

Companies may alter face value through stock splits.<\/p>\n

3. Equity Capital Reporting<\/h3>\n

Face value contributes toward the computation of equity share capital.<\/p>\n

4. Securities Premium<\/h3>\n

Amounts received above face value are generally recorded under securities premium.<\/p>\n

Why Is Face Value Important In Stock Markets?<\/h2>\n

Face value supports several corporate and accounting activities.<\/p>\n\n\n\n\n\n\n\n\n\n
Purpose<\/th>\nDescription<\/th>\n<\/tr>\n<\/thead>\n
Dividend Declaration<\/td>\nUsed as a reference for dividend announcements<\/td>\n<\/tr>\n
Corporate Actions<\/td>\nRelevant for stock splits, bonus issues, and consolidation<\/td>\n<\/tr>\n
Accounting Treatment<\/td>\nForms part of equity capital reporting<\/td>\n<\/tr>\n
Securities Premium<\/td>\nHelps determine premium received above nominal value<\/td>\n<\/tr>\n
Debt Instruments<\/td>\nRelevant for certain fixed-income securities<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Does Face Value Impact Investment Analysis?<\/h2>\n

Face value is primarily an accounting metric and does not directly indicate valuation or future business performance.<\/p>\n

Investors may evaluate face value alongside:<\/p>\n