Nominal Value in Shares: UK Company Law Guide & Compliance Steps

Key Takeaways

1. Nominal value in shares is the fixed face value each share carries under UK law and is crucial for accurate company records and compliance.
2. Setting the correct nominal value for shares helps ensure your company meets the requirements of the UK Companies Act 2006 and reduces the risk of legal disputes.
3. Issuing shares below their nominal value may result in shareholder liability for the unpaid amount, exposing your business to financial and legal problems.
4. The difference between nominal value and market value matters: nominal value sets your share capital, while market value reflects the real-world price.
5. Errors in recording or changing the nominal value of shares can invalidate share issuances or cause Companies House filing issues.
6. Go-Legal AI has over 170 five-star Trustpilot reviews and is rated Excellent, making our platform a trusted legal solution for UK businesses.
7. Go-Legal AI’s step-by-step templates and AI-guided tools help small business owners issue shares correctly and remain compliant—without the cost or delays of traditional lawyers.
8. Always notify Companies House promptly when the nominal value of shares changes to avoid compliance penalties and maintain accurate public records.
9. Go-Legal AI is rated Excellent on Trustpilot with over 170 five-star reviews.

What Is Nominal Value in Shares and Why Does It Matter for UK Companies?

Confused about how to set or record the nominal value of shares for your UK company? You’re not alone. Many founders, freelancers, and small business owners feel uncertain about share capital—and even small mistakes can cause compliance headaches, shareholder disputes, or oralderly Companies House filings.

Getting the nominal value of shares right is not just best practice: it’s a fundamental requirement under the Companies Act 2006. The nominal value determines each shareholder’s minimum liability and your company’s share capital. Issuing shares below their nominal value or failing to update records can lead to fines, invalid share issues, or costly disputes.

This guide covers everything you need to know about nominal value in shares—how it differs from market value, how to set and change nominal value, and practical steps to remain compliant. With Go-Legal AI’s lawyer-drafted templates and AI-powered guidance, you can handle share issuances and Companies House updates accurately, timely, and affordably—protecting your business from avoidable risks.

Understanding the Nominal Value in Shares and Its Impact on UK Companies

The nominal value in shares—also known as “par value”—is the minimum amount each shareholder must pay for every share issued, as specified in your company’s articles of association and statement of capital. Nominal values are commonly set low (e.g., £1, £0.10, or £0.01 per share), but you are free to choose any positive figure suitable for your business plan.

For UK companies, the nominal value is the foundation of your share capital structure and is entirely separate from the real-world or market value of shares. This amount must be paid up when shares are issued, ensuring clarity and transparency in your company’s capital.

Why Is Setting the Correct Nominal Value Important Under UK Law?

Setting the correct nominal value is much more than a formality—it’s a critical compliance step under UK law that governs your share capital structure, legal liability, and credibility.

Key reasons to get this right:

• Shareholder Liability: Shareholders are only liable to pay up to the nominal value. Issuing shares for less than nominal value is unlawful and directors may be personally liable for the unpaid amount.
• Creditor Protection: The stated nominal value contributes to your company’s capital, offering reassurance to creditors that there is a genuine legal minimum underpinning your business.
• Transparency & Professionalism: A realistic nominal value avoids misrepresenting your accounts, which could otherwise deter investors or cause friction during due diligence.
• Avoiding Disputes: Clearly defined nominal values prevent misunderstandings among founders and investors, particularly when raising funds or granting share options.

Nominal Value vs Market Value: What’s the Difference?

Understanding the distinction between nominal value and market value is vital:

• Nominal Value is written into company documents and remains constant unless formally changed.
• Market Value fluctuates based on company performance, demand, and (for public companies) trading activity.

Key Legal Requirements for Nominal Value in Shares (Companies Act 2006)

The Companies Act 2006 imposes several mandatory requirements for setting and maintaining nominal value in shares:

• Stated Nominal Value: Every share must have a stated nominal value in company articles and on the statement of capital.
• Issuing at or Above Nominal Value: Issuing shares for less than nominal value is unlawful and must be avoided.
• No “No-Par Value” Shares: UK companies cannot issue shares without a nominal value—unlike certain foreign jurisdictions.
• Share Premium Disclosure: If issued for more than nominal value, the excess is a separate “share premium” for transparency.
• Updating Public Records: You must always update Companies House with any change to the nominal value or share structure.

Essential Clauses and Compliance Checklist for Nominal Value in Shares

Your company’s constitutional documents and records need to properly address nominal value to remain legally compliant and reduce risks.

Compliance Checklist:

1. Decide on the right nominal value for each class of shares.
2. State nominal value clearly in the articles of association and statement of capital.
3. Ensure shares are only issued at or above nominal value.
4. Record share issue details, including nominal and premium values, in the member register and capital statements.
5. Update share certificates whenever new shares are issued or nominal values changed.
6. File any share capital changes at Companies House promptly.
7. Review and update all compliance documents as part of due diligence or when advised by an expert.

Step-by-Step Guide: How to Set and Change the Nominal Value in UK Shares

Setting Nominal Value When Incorporating

1. Choose Your Nominal Value: Decide whether your shares should be £1, £0.10, £0.01, or another amount, informed by your funding plans and anticipated investor base.
2. Draft the Articles of Association: Clearly state the nominal value for all share classes.
3. Complete the Statement of Capital: List all share classes with the corresponding nominal values for your Companies House IN01 registration form.
4. Register With Companies House: Include this information in your incorporation application.

Changing Nominal Value (Subdivision or Consolidation)

Changing nominal value—whether by subdivision (share split) or consolidation (share merge)—requires a legal process:

1. Board Submission: Have the directors propose a resolution to change the nominal value.
2. Special Shareholder Resolution: Pass the resolution with a 75% majority.
3. Update Articles of Association (if required): Amend the articles if they specify the old nominal value.
4. File Form SH02 Plus Statement of Capital: Submit these to Companies House within one month.
5. Amend Share Certificates and Register: Update all share documents to reflect the new nominal value.

Common Mistakes to Avoid With Nominal Value in Shares

Handling nominal value incorrectly can open your company to Companies House rejections, compliance penalties, or investor mistrust. The most common pitfalls include:

• Issuing Shares Below Nominal Value: This is strictly illegal in the UK—always check that issue price matches or exceeds nominal value.
• Failing to Update Articles and Registers: After changing nominal value, update every statutory record to prevent invalid share issues.
• Mixing Up Nominal and Market Value: Calculating share capital or negotiating investments based on market value, rather than the legal nominal value, leads to errors.
• Omitting Share Premium Calculation: Not recording the premium amount in your accounts can result in incomplete or incorrect filings.
• Incorrect Company Filings: Missing or misstating nominal value on Companies House returns can delay business transactions or trigger penalties.

Can UK Companies Issue Shares With No Nominal Value or Change Their Existing Value?

Shares With No Nominal Value

UK companies cannot issue shares with no nominal value. The Companies Act 2006 mandates that every share must have a clearly defined, positive nominal value. This contrasts with jurisdictions like the United States, where “no par value” shares are common.

Changing the Nominal Value

You can change the nominal value by subdivision (splitting shares into more with a lower value per share) or consolidation (combining shares into fewer, higher-value shares). Each process requires a special shareholder resolution, updated company records, and prompt Companies House filings.

How to Update Companies House After Changing Nominal Value

Whenever you change the nominal value of shares, you must update Companies House to avoid legal risk and maintain accurate public records:

1. Prepare the Updated Statement of Capital: Detail the new share classes and nominal values.
2. File Form SH02: Notify Companies House of subdivisions or consolidations within one month.
3. Attach Special Resolution: Include evidence the required shareholder resolution was passed.
4. Update Registers and Certificates: Issue new or re-issued share certificates and ensure your member register is updated.
5. Meet Filing Deadlines: Late filings can result in penalties or invalidate the share change.

How Go-Legal AI Simplifies Nominal Value Compliance for UK Companies

Go-Legal AI removes hassle and risk from managing nominal value in shares with features designed for busy founders and finance teams:

• AI-Powered Templates: Instantly generate articles of association, board resolutions, and share certificates tailored to your chosen nominal value.
• Instant Document Review: Upload company documents and immediately spot missing, incorrect, or inconsistent nominal values.
• Step-by-Step Compliance Packs: Download ready-to-use checklists pre-filled with Companies Act 2006 requirements for every task.
• Automated Filing Alerts: Never miss Companies House deadlines or statutory steps thanks to built-in reminders.
• In-Platform Expert Guidance: Access lawyer-reviewed notes and explanations as you prepare, issue, or amend shares.

Frequently Asked Questions

Can I issue shares with no nominal value in the UK?

No. Every share must have a nominal value under the Companies Act 2006. Shares with “no par value” are not permitted in UK companies.

How do I choose the right nominal value for my company?

Assess your future capital needs, anticipated funding rounds, and employee incentives. Lower nominal values (such as £0.01) offer greater flexibility, but always align with your company’s long-term plans.

What’s the penalty for issuing shares below nominal value?

Issuing shares below their nominal value is unlawful (section 580 CA 2006). The transaction could be declared void, and directors may be liable for any shortfall.

Do I need to inform Companies House each time I change nominal value?

Yes. You must file the correct Companies House forms (usually SH02) and an updated statement of capital within one month of any change.

Can I change the nominal value of only one share class?

Yes, if your articles of association allow it and you follow proper Companies House filing and special resolution requirements.

How do I update the shareholder register and certificates after a change?

After approval and Companies House filing, update your register of members and reissue share certificates showing the new nominal value.

How does Go-Legal AI assist with nominal value compliance?

Our platform reviews your drafted documents, highlights missing elements, and provides step-by-step packs to streamline compliance and prevent common mistakes.

Streamline Your Share Capital Compliance with Go-Legal AI

Setting and maintaining the correct nominal value in shares is more than a legal tick-box—it safeguards your business, reassures investors, and keeps you compliant with UK company law. Every inaccuracy or outdated template increases the risk of Companies House rejections, costly disputes, or even invalid share capital.

With Go-Legal AI, you have the tools and expert knowledge to issue and manage shares confidently. Our platform leverages AI and solicitor-approved templates, helping you draft, review, and update every share capital document—while automated guides and reminders keep you compliant from day one.

Take the risk and complexity out of nominal value compliance for your UK company. Start your free trial and experience how easy share capital management can be.