UK law requires a fixed monetary value to be attached to shares that are issued in a company. Nominal value represents that monetary value, which is the minimum amount that must be paid up by a shareholder in respect of each fully paid share that is issued in a company. Companies cannot issue shares with no nominal value and the nominal value represents the limit of a shareholder’s liability to a company on a winding up or insolvency event.
Shares may be denominated in any currency and different classes may also be denominated in different currencies.
The typical range for nominal values can be from £0.000001 to £1 per share but there is no set requirement.
As a company’s value increases, shares will be issued at the agreed market value which will represent a premium above the nominal value.
Depending on the circumstances, there can be advantages and disadvantages to selecting a nominal value that is either too high or too low. The circumstances will dictate the appropriate nominal value on a case-by-case basis.