Face Value

Face value, also called par value or nominal value, refers to the value stated by the issuer on a financial instrument. It represents the original fixed value assigned at the time of issuance and is usually printed on the certificate or mentioned in the official documents of the instrument.

For example, the face value of a ₹100 currency note is ₹100—the amount guaranteed by the central bank.

In financial markets, face value has important implications for stocks, bonds, and other securities.

Face Value in the Context of Securities

1. Face Value of Shares (Equity)

• It is the initial price set by a company for each share at the time of issuance (usually ₹1, ₹2, or ₹10 in India).

• It does not reflect the market price; the market price is determined by demand and supply.

• Used to calculate:

  • Dividend amounts

  • Share split ratios

  • Certain regulatory requirements

Example:
If a share has a face value of ₹10, and the company declares a 20% dividend, the dividend paid is ₹2 per share (20% of ₹10), not based on the market price

.