The nominal/par value per share

When forming a company having a share capital it is necessary to state the total number of shares of the company to be taken on formation by the subscribers to the memorandum of association, the aggregate nominal value of those shares and the amount to be paid up and the amount (if any) to be unpaid on each share (whether on account of the nominal value of the share or by way of premium) - section 10 of the Companies Act 2006. It is also necessary to state, with respect to each subscriber to the memorandum of association, the number, nominal value (of each share) and class of shares to be taken by him on formation, and the amount to be paid up and the amount (if any) to be unpaid on each share (whether on account of the nominal value of the share or by way of premium) - section 10 of the Companies Act 2006.

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.

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