face value of a share

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Adnan Mohammed Atiq (Querist)
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18 October 2010 what is face value of a share?
Is it after adding premium and deducting discount or its just the normal value.

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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18 October 2010 To understand this term I will take one example to make this to you understand in a easy and proper way. Face value is basic price of a share that is generally 10 Rs per share. Except that face value can be 1 Rs, 2 Rs, 5 Rs, 100 Rs and rarely 1000 Rs.
Lets take and example of Adani Power where the IPO price band was 90 to 100 Rs and the final price was 100 Rs.
The face value of share is 10 Rs, and rest is 90 Rs which is called as Premium. So the simple formula to understand this concept is:

Total Share price = Face value + Premium

Ajay Mishra

Ajay Mishra (Expert)
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19 October 2010 Hi

The value of the share of stock as it is actually printed on the face of the certificate.
All companies issue shares (during IPO's) with a fixed denomination called the face value of the share. This face value will be indicated on the share certificate. Generally Indian shares has a face value of Rs. 10/-.

This face value is used when calculating the dividends.

The face value is not related to prevailing market value of the share.

The market value of the share changes daily due to supply & demand but the face value is fixed.
But when the share is split, the market value reduces accordingly.

Regards

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