par value
Par value is the small fixed amount printed on a share certificate that has almost nothing to do with what the share is actually worth on the market.
In plain English
If a share of a company you like is trading at ₦45 on the Nigerian Exchange, why does its certificate sometimes say ₦0.50 or ₦1? That gap confuses a lot of new investors, and it is a fair thing to wonder about.
Par value is simply the face value a company assigns to each share when it is first set up, written into its memorandum and articles of association. It is a legal and accounting figure, not a price tag. Think of it as the minimum amount the company promises each share is worth on paper, mostly used to calculate share capital in the company's books.
In Nigeria, many companies list shares with a par value of ₦0.50 or ₦1, yet those same shares can trade for ₦20, ₦100, or far more on the stock exchange, depending on demand, profits, and how investors feel about the company's future. The market decides the real price. Par value just sits calmly in the background as a bookkeeping starting point.
A UK example works the same way. A company on the London Stock Exchange might set a nominal value of £0.01 per share, while the share itself trades at several pounds. That nominal value shows up in company filings, but nobody buying the share on their trading app is paying attention to it.
The one place par value actually matters is when a company raises new shares. It cannot sell shares below par value, since that would legally mean selling at a loss on paper. Beyond that boundary, it rarely affects your returns, your dividends, or what you should pay for a share today.
A company sets a par value of ₦1 per share at incorporation. Years later, after strong profits and investor demand, that same share trades on the exchange at ₦38. Your gains or losses depend on that ₦38 market price, not the original ₦1 printed on the certificate.
Questions people ask
Does par value affect how much dividend I receive?
Not directly. Dividends are usually declared as a percentage of profit or as a fixed amount per share decided by the board, and they are paid based on how many shares you hold, not the par value printed on them.
Why do some Nigerian shares have such low par values like ₦0.50?
It goes back to how the company structured its share capital at incorporation. A low par value lets the company issue more shares for the same amount of capital, and it has no bearing on the share's current trading price.
Can a company change its par value later?
Yes, through a process like a share split or consolidation, approved by shareholders and regulators, but this is a structural change to the company's shares and is separate from daily price movements on the market.
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