stated value
Stated Value is the fixed amount a company assigns to shares without par value, used for bookkeeping rather than to show what the share is truly worth.
In plain English
Here is the odd part. A company can print shares that say nothing about worth, then turn around and stamp a number on them anyway, purely so the accountants have something to write down. That number is the stated value, and it has almost nothing to do with what anyone would actually pay for the share.
In Nigeria, most companies registered under CAMA issue shares with a par value, so this feels foreign at first. But some jurisdictions, and certain foreign registered entities that Nigerians deal with abroad, allow no par value shares. When that happens, the directors simply pick a figure, say ₦1 or ₦10 per share, and that becomes the stated value entered into the share capital account. It is a bookkeeping convenience, not a verdict on the company's health.
Think of a Nigerian entrepreneur in London who sets up a private limited company for her fashion export business. If she issues shares with no par value, her accountant still needs a figure to record in the books for share capital, so the board resolves a stated value, perhaps £1 per share, and that is what shows up on the balance sheet, no matter what investors later pay for those same shares.
The confusion many people fall into is assuming stated value tells you what a share is worth on the market. It does not. A share with a stated value of ₦1 could sell for ₦500 if the company is doing well, because the market price depends on earnings, growth and demand, none of which the stated value reflects.
So the next time you see a modest figure sitting calmly in a company's share capital note, remember it is a label the accountants needed, not a price tag the market agreed on.
A start up issues 1,000,000 shares with a stated value of ₦1 each. That means ₦1,000,000 appears as share capital on the balance sheet, even though investors might pay ₦50 per share, valuing the company at ₦50,000,000 in reality.
Questions people ask
Is stated value the same as par value?
They serve a similar bookkeeping purpose, but par value is set out in the company's constitution as a legal minimum, while stated value is chosen by directors for shares that have no par value at all, so it carries less legal weight.
Does stated value affect how much dividend I receive?
No. Dividends are usually declared per share based on company profits and board decisions, not tied to the stated value figure sitting in the accounts.
Why would a company bother with a stated value if it means so little?
Company law and accounting standards often require every share to have some recorded value for the share capital account to balance, so stated value exists to satisfy that bookkeeping requirement even when no par value was fixed.
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