Face Value

When a company legally starts its business, it issues shares to shareholders (founders, family, and institutional investors) at a price known as the Face Value. Face value, or nominal value, is used for accounting and dividend calculation purposes.

For example, ABC Pvt Ltd started its business with Rs. 2 lac. It sells its shares to the shareholders at the face value of Rs. 10.

Now, when a company wants to raise capital from the primary market through an IPO, it must sell some shares to the public. These shares are sold at the issue price or share price, which is always higher than the face value. The difference between face value and the share price is known as the share premium.

Usage of Face Value

Companies always issues dividends at face value. If a company says that it will pay a dividend of 120%. This means that they pay a dividend at face value.

Face value = Rs 10, Dividend = 120%

10*120% = Rs 12.

The company will pay a dividend of Rs 12 per share.

This is an example of the Indegene IPO. In the below table Face value and Issue Price in band/ range are mentioned. The face value will remain the same after the listing. It is only used for accounting purposes and to calculate dividends.