The par value of shares is the initial value at which shares are sold when a joint stock company is established. In other words, this is the value that is indicated on the shares at issue. It is worth noting that the conventionality of the nominal value in relation to the real value in developed countries led to the fact that it became permissible to issue shares without specifying it, that is, only the number, series and class of shares is indicated.
Nominal value is subject to change. In case of its increase, it is necessary to register the issue of shares with a new face value with the appropriate authority, and remove the old shares or their certificates from circulation and issue all the shareholders with new certificates and shares.
Unlike the face value, the share price is the price that has been established in the market. It is also called the market value. That is, at this price, shares are bought and sold. If the face value is above market, then its owner receives a premium. If lower, then this is called a discount. It rarely happens when these values are equal. This situation is called alpari.
In the balance sheet, the issue of securities is initially recorded at face value. Then the subsequent sale of shares at a price above par will result in additional capital. Therefore, this indicator is primarily important for accounting.
If the shares are quoted on stock exchanges, then they will be sold at the market price, which should be determined in US dollars. When quoting a stock, the price of it may increase or decrease. It often happens that liquid stocks easily become empty pieces of paper, so the broker's art is to manage to sell such stocks on time and not lose investment. Also, the value of the shares may increase, then the broker should buy such shares on time in order to get a good profit. This business is associated with serious risks. You can either win big money from the sale of shares or lose your investments.
In addition, the concept of “face value” applies to the value of coins. In this case, the face value will differ not only from the value in the market, but, above all, from the collection value determined by auctions. As a rule, the nominal value of investment coins often has a purely formal character, since its value is determined by the weight of the noble metal included in its composition.
Many joint-stock companies would like to sell their shares, but who will really need them? In the Russian Federation, demand is mainly for blue chips. The shares of Gazprom, Norilsk Nickel, and NK LUKoil will always be respected. But it should be noted that large blocks of shares of such companies go to Moscow or even abroad. Most of the small shareholders do not want to invest in large joint-stock companies, believing that their vote will be almost weightless. After all, the nominal value of a share of shares is of great importance here. The larger the proportion, the greater the weight. But, accordingly, the greater the value of the company, the more the controlling stake will cost.
In order to protect the interests of both the joint stock company itself and the shareholders, the law established serious obstacles to the acquisition of a controlling stake by one person. The concentration of a significant share of shares in one hand may deprive small shareholders of the incentive to purchase securities, since all decisions of the general meeting will be determined by decisions of one person.
The charter of a company may determine the maximum total nominal value, maximum number of shares, maximum number of votes per shareholder.