What is face value of a share?
Face value (par value) is the nominal value of a share set in a company's accounts — most PSX shares have a face value of Rs 10 — distinct from the market price.
The face value of a share — also called par value or nominal value — is the fixed accounting value assigned to a share when it is issued. On the Pakistan Stock Exchange, the standard face value is Rs 10 per share, though some companies have shares with a different par value such as Rs 5.
Face value is largely an accounting and legal reference point, not the price you pay. When a company reports its share capital, it does so in terms of face value: a firm with 100 million shares of Rs 10 face value has a paid-up capital of Rs 1 billion. The difference between what investors originally paid above par and the face value sits in a separate reserve called the share premium.
It is crucial not to confuse face value with market price. A share with a Rs 10 face value might trade at Rs 150 if the company is profitable and in demand, or below Rs 10 if the market is pessimistic about its prospects. The market price reflects supply, demand, earnings, and expectations; the face value stays fixed unless the company formally changes it.
Face value matters in several real situations on the PSX:
- Dividends are often quoted as a percentage of face value. A "100% cash dividend" means Rs 10 per share (100% of the Rs 10 par), not 100% of the market price. This is a common point of confusion for new investors. - Bonus shares and right shares are also expressed relative to face value. - A stock split reduces the face value (for example from Rs 10 to Rs 5) and increases the share count proportionally, lowering the market price per share without changing the company's total value.
Because so many corporate actions are framed in terms of face value, understanding it helps you translate announcements into rupees. When a company declares a "50% bonus," knowing the par value lets you work out exactly how many extra shares you will receive.
In short, face value is the share's nominal "sticker" value in the books — a stable reference for capital, dividends, and corporate actions — while the market price is the living number that changes every trading day.