Reviewed on 24 Oct 2026 · Source: IPO Bulletin explainer; checked against Companies Act 2013 terminology and offer-document practice
Face value, also called par value or nominal value, is the value printed on a share in the company’s books when it is first created. It is typically Rs 1, Rs 2, Rs 5 or Rs 10 per share and is fixed in the company’s charter documents. It is an accounting number and has nothing to do with what the share is worth in the market or what you pay in an IPO. The issue price can be many times the face value; the portion above face value is called the premium. For example, a company with a face value of Rs 10 that sells shares at Rs 150 collects Rs 10 as share capital and Rs 140 as securities premium. Face value matters in a few places: dividends are often quoted as a percentage of face value, bonus issues and stock splits change it, and the share capital shown in the balance sheet is the number of shares multiplied by the face value. When a company splits its shares, the face value falls and the number of shares rises, while the total value of your holding stays the same. The face value is always stated on the front of the prospectus summary.
Example: A company has a face value of Rs 10 and an issue price of Rs 120. For every share issued it books Rs 10 in share capital and Rs 110 as premium. If it later splits each share into two, the face value becomes Rs 5 and you hold twice as many shares.
A prospectus is the legal document in which a company invites the public to subscribe to its shares or debentures and discloses the information investors need to decide. In India the Companies Act 2013 and SEBI regulations require it to contain complete and accurate details about the business, promoters, directors, financial statements, risks, legal cases, capital structure and the purpose for which funds are being raised. There are stages in the document trail of an IPO: the Draft Red Herring Prospectus filed with SEBI, the Red Herring Prospectus filed before the issue opens, and the final Prospectus filed with the Registrar of Companies after the price and size have been fixed. The final prospectus is the binding document that records the issue price, the amount raised and the allotment details. Because investors rely on it, the company, its directors and the lead managers carry legal liability for any misstatement, and investors can seek remedies for material misrepresentation. For ordinary investors a long prospectus can be daunting, so start with the summary of the issue, the risk factors, the objects of the issue and the financial tables, and then read the rest as needed.
Face value, also called par value or nominal value, is the value printed on a share in the company's books when it is first created. It is typically Rs 1, Rs 2, Rs 5 or Rs 10 per share and is fixed in the company's charter documents. It is an accounting number and has nothing to do with what the share is worth in the market or what you pay in an IPO. The issue price can be many times the face value; the portion above face value is called the premium. For example, a company with a face value of Rs 10 that sells shares at Rs 150 collects Rs 10 as share capital and Rs 140 as securities premium. Face value matters in a few places: dividends are often quoted as a percentage of face value, bonus issues and stock splits change it, and the share capital shown in the balance sheet is the number of shares multiplied by the face value. When a company splits its shares, the face value falls and the number of shares rises, while the total value of your holding stays the same. The face value is always stated on the front of the prospectus summary.
Worked example
A company has a face value of Rs 10 and an issue price of Rs 120. For every share issued it books Rs 10 in share capital and Rs 110 as premium. If it later splits each share into two, the face value becomes Rs 5 and you hold twice as many shares.
