When you register a UK limited company, you will be asked to provide information about its shares. One of the terms you are likely to encounter is nominal share value. For a new business owner, it can sound more complicated than it really is. What does “nominal value” actually mean? Why do so many UK companies use £1 shares? Does a £1 share mean the company is worth £1? And does choosing a lower nominal value reduce the amount you need to put into the company?

The short answer is: Nominal share value is the fixed face value assigned to each share in a company’s share capital. It is not the market value of the company or what the share will necessarily be worth if sold. Under the Companies Act 2006, shares in a limited company with share capital must each have a fixed nominal value.

For many straightforward private companies, founders choose a simple structure such as 100 ordinary shares with a nominal value of £1 each. But £1 is not compulsory. GOV.UK confirms that the price of an individual share can be any value. Understanding the difference between nominal value, share capital, ownership and market value is important before you incorporate.

What Is Nominal Share Value?

Nominal share value, sometimes called nominal value, par value or face value, is the fixed value assigned to an individual share when the share is created. For example, a company might issue: 100 ordinary shares at £1 nominal value each. The company's nominal share capital would therefore be: 100 × £1 = £100, Alternatively, it could issue: 100 ordinary shares at £0.01 each. The nominal share capital would then be: 100 × £0.01 = £1

The number of shares is the same in both examples. The difference is the nominal value assigned to each share. Companies House requires information about the company's total number of shares, aggregate nominal value, share classes and amounts paid or unpaid as part of its statement of capital.

Does Nominal Value Mean the Share Is Actually Worth That Amount?

No. This is the most important point to understand. A £1 nominal share does not necessarily have a market value of £1. Imagine that you establish a company with:

• 100 ordinary shares
• £1 nominal value per share
• £100 total nominal share capital

Five years later, the company has valuable intellectual property, recurring customers, substantial revenue and strong profits. The shares could be worth considerably more than £1 each if somebody wanted to buy them. The opposite can also happen. A company's shares may have little or no economic value even though their nominal value remains £1.

HMRC treats nominal share capital and the economic or market value of shares as separate concepts. Its guidance explains that share capital reflects the equity interests of members, while shares can have a market value that is different from their nominal value. So: Nominal value is a legal and accounting reference point, not a valuation of the business.

Why Do UK Companies Have Nominal Share Values?

Nominal value provides a fixed reference point for the company's share capital. It helps establish:

• How much nominal share capital has been issued
• How ownership is divided into shares
• How much is paid or remains unpaid on shares
• The company's share capital position
• The relationship between shares and amounts subscribed for them

The Companies Act requires each share in a limited company with share capital to have a fixed nominal value. It also permits shares to be denominated in different currencies, subject to the applicable rules. This means the nominal value is part of the company's legal capital structure rather than an arbitrary number added to make the business appear more valuable.

What Is Share Capital?

To understand nominal value properly, it helps to understand share capital. Share capital is broadly the amount represented by shares issued by the company at their nominal value. For example:

Example 1: 100 £1 shares

100 shares × £1 = £100 share capital

Example 2: 1,000 £0.10 shares

1,000 shares × £0.10 = £100 share capital

Example 3: 10,000 £0.01 shares

10,000 shares × £0.01 = £100 share capital, All three companies have: £100 nominal share capital, But they divide their ownership into very different numbers of shares. This is why number of shares and nominal value are separate decisions.

What Is the Difference Between Nominal Value and Market Value?

These two terms are often confused, particularly by first-time founders.

Nominal value

Nominal value is the fixed value assigned to each share. It is relevant to the company's:

• Share capital
• Statement of capital
• Amount paid or unpaid on shares
• Legal capital structure

Market value

Market value is what the shares may actually be worth economically. It can be influenced by:

• Revenue
• Profitability
• Assets
• Debt
• Intellectual property
• Growth prospects
• Investor demand
• The rights attached to the shares
• The size of the shareholding
• Market conditions

For example, a startup could have 1,000 shares with a nominal value of £0.01 each, giving it only £10 of nominal share capital. If an investor later agrees that the business is worth £500,000 before investment, the economic value of the shares is obviously very different from their £0.01 nominal value. That is completely normal.

Why Do Many New UK Companies Use £1 Shares?

There is no requirement to use £1 shares, but £1 is simple and familiar. Suppose you are forming a company with 100 ordinary shares: 100 × £1 = £100, The ownership calculation is also easy:

• 100 shares = 100%
• 75 shares = 75%
• 50 shares = 50%
• 25 shares = 25%
• 10 shares = 10%

For a small business with one founder or a few shareholders, this simplicity can be useful. GOV.UK specifically gives £1 as an example of a low share value that can be used to limit shareholders' liability to a reasonable amount. However, £1 is a convention, not a legal minimum.

Can a Share Have a Nominal Value of £0.01?

Yes. A company could, for example, issue: 1,000 ordinary shares at £0.01 each. That creates: £10 nominal share capital. This type of structure can be useful where founders want a relatively large number of shares without creating a large nominal share capital. For example, a technology startup might prefer: 10,000 shares × £0.01 = £100 rather than: 100 shares × £1 = £100

Both have £100 of nominal share capital. The difference is that the first structure divides ownership into 10,000 units instead of 100. Neither structure is automatically superior.

Does a Lower Nominal Value Reduce My Liability?

It can affect the amount unpaid on the shares, but the details matter. For a company limited by shares, members' liability is generally limited to any amount unpaid on their shares. If the shares are fully paid, there is generally no further liability in respect of those shares. Consider two examples.

Company A

You own 100 shares at £1 each. They are fully paid, Your obligation relating to the nominal value is therefore satisfied.

Company B

You own 100 shares at £0.01 each. They are fully paid. Again, the nominal amount is fully paid. The practical point is that the shareholder's potential obligation can depend on how much of the shares has actually been paid.

This is one reason GOV.UK notes that a low share value can help limit the shareholder's liability to a reasonable amount. However, founders should not interpret this as meaning that choosing a tiny nominal value eliminates every possible financial obligation associated with running a company.

What Does “Fully Paid” Mean?

When shares are issued, they can be fully paid or, in some circumstances, partly paid. Suppose a company has: 100 shares with a nominal value of £1 each. If the shares are fully paid, the shareholder has paid the required amount. If they are only partly paid, some amount remains outstanding.

HMRC gives the example of a £1 share that is issued partly paid at 60p, leaving a further 40p that the company can potentially call for later. For a straightforward new small business, founders commonly keep things simple by having their initial shares fully paid. Partly paid arrangements can be more complicated and may have legal, accounting and tax implications, particularly where employees or investors are involved.

Can Shares Be Issued Above Their Nominal Value?

Yes. This is particularly important when a company raises investment. Imagine a startup has: 1,000 ordinary shares at £0.01 nominal value. The nominal value of each share is 1p. The company later attracts an investor who agrees to pay £5 per share.

The share has a nominal value of 1p, but the subscription price is £5. The difference between the issue price and nominal value can represent a share premium. HMRC explains that where shares are issued at a premium over nominal value, the premium is reflected in a share premium account separately from nominal share capital. This is one of the clearest examples of why nominal value should not be confused with investment value.

Can Shares Be Issued Below Nominal Value?

Generally, a company cannot issue shares at a price below their nominal value. The Companies Act 2006 contains restrictions on shares being allotted at a discount to their nominal value. HMRC's guidance on employment-related securities also confirms that a share's fully paid-up value cannot be below its nominal value. For example, if a share has: £1 nominal value

the company cannot simply issue a fully paid share for 50p. This is one reason founders should think carefully about nominal value when designing a share structure. A nominal value that is unnecessarily high can create constraints that a lower nominal value might avoid.

Does Nominal Value Affect Company Valuation?

Not directly. This is worth repeating because it causes so much confusion. Suppose two companies are identical in every respect except their share structures.

Company A

• 100 shares
• £1 nominal value
• £100 nominal share capital

Company B

• 10,000 shares
• £0.01 nominal value
• £100 nominal share capital

Both have exactly £100 of nominal share capital. Now imagine each business is valued at £1 million, The nominal value has not changed the underlying business valuation. What matters for ownership is how the total shares are divided.

In Company A, a shareholder owning 10 shares has 10%. In Company B, a shareholder owning 1,000 shares has 10%. The percentage is the same.

How Nominal Value Relates to Ownership

Nominal value does not determine who owns what percentage. Share quantity does. Suppose a company has: 100 ordinary shares at £1 each. Founder A owns 70 shares. Founder B owns 30 shares.

Their ownership is:

• Founder A: 70%
• Founder B: 30%

Now suppose another company has: 10,000 ordinary shares at £0.01 each.

Founder A owns 7,000.

Founder B owns 3,000.

The ownership is still:

• Founder A: 70%
• Founder B: 30%

The nominal value is different, but the ownership percentages are identical. This distinction becomes particularly important when founders discuss investment and dilution.

Nominal Value and Startup Investment

For startups, nominal value becomes more interesting because companies may issue new shares as they raise funding. Suppose a founder starts with: 1,000 shares at £0.01 each. The founder owns 100%. An investor later receives 250 new shares. The company now has: 1,250 shares.

The founder owns:

1,000 ÷ 1,250 = 80%

The investor owns:

250 ÷ 1,250 = 20%

The nominal value remains 1p per share. What changed was the number of shares and the ownership percentages, not the nominal value. When additional shares are issued, Companies House generally needs to be notified within one month. This is why startup founders should think about share structure as part of their broader capital planning.

Is £1 Nominal Value Better Than £0.01?

There is no universal winner.

£1 shares may suit you if:

• You are forming a straightforward small business
• You have one or a few shareholders
• You want very simple calculations
• You want an easy-to-explain structure
• You do not anticipate a complicated investment structure

£0.01 shares may be useful if:

• You want a larger number of shares
• You are designing a startup capital structure
• You want more granular ownership percentages
• You anticipate future share issues
• You want relatively low nominal share capital

The key is not to choose a value simply because another company uses it.

What About 1 Share at £1?

A sole founder can also use: 1 ordinary share at £1. The founder owns: 100% and the nominal share capital is: £1, This is perfectly different from: 100 ordinary shares at £1 each

where the founder also owns 100%. The economic ownership is identical at the beginning. The difference is flexibility. With 100 shares, it is easier to express future ownership percentages without changing the existing share structure. With one share, bringing in another shareholder may require an additional share issue or restructuring. For this reason, many founders prefer 100 shares even when they are initially the only shareholder.

Does Nominal Value Matter for Global Founders?

For international entrepreneurs establishing UK companies remotely, nominal value is still part of the company's legal share structure. A founder living outside the UK might establish: 100 ordinary shares at £1 each and own all 100 shares.

Alternatively, the founder could use a different number and nominal value. The important point is to understand what is being created rather than treating the share-value field as a box that can be filled in arbitrarily. IncorpUK, as a UK company formation and management platform for global founders, can help with the practical side of forming and managing a UK company. However, founders considering investment rounds, employee equity, unusual share classes or tax-sensitive transactions should consider professional legal or accounting advice.

What Happens If You Change Your Share Structure?

A company can change its share structure after incorporation, but it may need to follow specific procedures and notify Companies House. GOV.UK says companies must tell Companies House about changes to share structure made outside the confirmation statement. Depending on the change, this can include:

• Changing the number of shares and their total value
• Changing how shares are distributed
• Cancelling shares
• Changing the currency in which shares are denominated

Companies House generally requires changes to newly issued shares to be reported within one month, while other relevant share-structure changes generally need to be reported within 21 days. This is another reason to get the initial structure reasonably right. You can change it later, but unnecessary restructuring creates additional administration.

Common Mistakes Founders Make

Mistake 1: Thinking £1 means £1 of company value

It does not. Nominal value is not a business valuation.

Mistake 2: Assuming £1 is legally required

It isn't. A share can have another fixed nominal value.

Mistake 3: Choosing a huge nominal value

Issuing 100,000 shares at £1 each creates £100,000 of nominal share capital. That may create a much larger payment obligation than a new small business actually needs.

Mistake 4: Confusing share number with ownership percentage

Owning 10 shares does not automatically mean owning 10% of a company. It means 10% only if there are 100 shares in total in the relevant class.

Mistake 5: Ignoring unpaid amounts

If shares are not fully paid, the unpaid amount can matter. A limited company's shareholders can remain liable for amounts unpaid on their shares.

Mistake 6: Designing a startup structure without considering future investment

A simple company and an investment-backed startup may need very different capital structures.

A Practical Example: Choosing the Right Nominal Value

Imagine three founders are launching a software company. They agree:

• Founder A: 50%
• Founder B: 30%
• Founder C: 20%

They could use:

Structure A

100 shares at £1:

• A: 50
• B: 30
• C: 20
• Share capital: £100

Or:

Structure B

10,000 shares at £0.01:

• A: 5,000
• B: 3,000
• C: 2,000
• Share capital: £100

The ownership percentages are exactly the same. If the founders expect future investors and employee equity, the second structure may provide more granular units. But there is no automatic legal or commercial advantage simply because it contains more shares. The right choice depends on the company's wider plans.

Frequently Asked Questions

What is nominal share value in a UK company?

Nominal share value is the fixed face value assigned to each share in a company's share capital. Under the Companies Act 2006, shares in a limited company with share capital must have a fixed nominal value.

Is nominal value the same as share price?

No. Nominal value is the fixed value assigned to the share. The amount paid for a share when it is issued can be higher, and its market value can later be substantially different.

What is a common nominal value for UK shares?

£1 is a common and simple choice for small private companies, but it is not mandatory. GOV.UK states that an individual share can have any value.

Can UK shares have a nominal value of 1p?

Yes. A company can use a nominal value of £0.01 per share, provided the share structure complies with the applicable company-law requirements.

Does a £1 share mean my company is worth £1?

No. A £1 nominal value does not determine the company's market value.

Does nominal value affect shareholder liability?

It can. For a company limited by shares, members' liability is generally limited to amounts unpaid on their shares. Fully paid shares generally leave no further liability in respect of the share capital.

Can shares be issued above nominal value?

Yes. Shares can be issued at a premium above their nominal value, with the premium treated separately from nominal share capital in the relevant accounting and company-law context.

Can shares be issued below nominal value?

Generally, a company cannot issue shares at a discount below their nominal value. The Companies Act contains restrictions on such issues.

Should I use £1 or £0.01 shares?

For a simple small business, £1 shares are easy to understand and manage. A lower nominal value can make sense where a company wants a larger number of shares or is planning a more sophisticated ownership structure.

Conclusion: Nominal Value Is About Share Structure, Not Company Worth

Nominal share value is one of those company-formation concepts that looks more complicated than it really is. At its simplest, it is the fixed face value assigned to each share in a company's share capital. A company might have: 100 shares at £1 each = £100 nominal share capital or: 10,000 shares at £0.01 each = £100 nominal share capital Both structures can represent exactly the same total nominal share capital and exactly the same ownership percentages.

What they do not tell you is how much the business is worth. That is the critical distinction. Nominal value is not market value. Share capital is not the same as company valuation. And having more shares does not automatically make a company more valuable. For a straightforward new UK company, a simple structure such as 100 ordinary shares at £1 each can be perfectly practical. For a startup expecting investors, employee equity or multiple share classes, the share structure deserves more careful planning.

If you understand the relationship between number of shares, nominal value, paid-up capital, ownership percentage and market value, you can make the share information you submit when incorporating your UK company far more confidently. And when the business grows, that foundation will make future changes to the company's ownership and capital structure much easier to understand.