Nominal Share Value: A Legal Floor, Not a Price Tag
By SuLe · Updated 12 August 2026
Reviewed by Patricia Wing, corporate lawyer and founder of SuLe
Startups planning to raise investment typically use a tiny nominal value such as £0.001 or £0.0001 per share, rather than £1. Nominal value is the fixed face value of a share, and under the Companies Act 2006 you can never issue shares for less than it - a low value keeps that floor out of your way and makes large, flexible share counts cheap.
Key facts
- Every share must have a fixed nominal value, and shares cannot be issued for less than it (Companies Act 2006).
- Any amount is lawful: £1, £0.01, £0.001 or £0.0001 all work.
- £0.001 or £0.0001 is common for startups planning to raise; £1 is common at incorporation but less flexible later.
- Nominal value is not market value - a £0.001 share can be issued to an investor at £2.00, with £1.999 recorded as share premium.
- 1,000,000 shares at £0.0001 cost founders £100 in total.
What does nominal value actually mean?
Nominal value - sometimes called par value - is the fixed face value printed on a share: £1, £0.001, whatever the founders chose at incorporation. It is a legal accounting label, not a price.
Its one hard rule comes from the Companies Act 2006: a share can never be issued for less than its nominal value. Anything paid above it is recorded separately as share premium.
So a seed investor paying £2.00 for a £0.001 share is normal: £0.001 of capital, £1.999 of premium. Nominal value tells you nothing about what the company is worth.
Why do startups choose £0.001 rather than £1?
Because tiny values make big share counts affordable, and big counts make everything else easier. 100,000 shares at £0.001 cost the founders £100; at £1 nominal the same count would cost £100,000.
Large counts buy granularity - with 100,000 shares, 1% is 1,000 shares - which is what option grants, advisor stakes and clean investor maths all depend on. That is why £0.001 or £0.0001 is the common choice for startups planning to raise, while £1 shares, though common at incorporation, age badly.
| 100,000 shares at £1 | 100,000 shares at £0.001 | |
|---|---|---|
| Founders must pay (or owe) | £100,000 | £100 |
| Lowest lawful issue price per share | £1 | £0.001 |
| Investor pays £2.00 per share | £1 premium per share | £1.999 premium per share |
| Risk of the nominal floor biting | Real if the share price ever nears £1 | Effectively none |
| Fixing it later | Subdivision - resolutions and filings | Rarely needed |
When does a £1 nominal value cause problems?
When it stops being a label and becomes a floor. Because shares cannot be issued below nominal value, £1 is the lowest price your company can ever lawfully issue a share at - awkward if a down round, an option exercise price or a restructuring wants a lower number.
It also makes fractions of ownership coarse and capital expensive. UK law does not allow fractional shares, and paying up a large count at £1 each is real money rather than a rounding error.
None of this bites on day one. It bites in year three, mid-negotiation, when fixing it means extra resolutions on the critical path.
Can I change the nominal value later?
Yes - the usual route is subdivision: splitting each share into several of smaller nominal value, so each £1 share becomes, say, 1,000 shares of £0.001. Percentages do not move; only the labels and the count change.
It needs a shareholder resolution and Companies House filings - straightforward, but one more workstream if you are doing it mid-round. Choosing a small value at incorporation costs nothing and avoids the errand entirely.
Worked example
Freya and Callum incorporate Hooklight Labs Ltd, a developer-tools startup, with 1,000,000 ordinary shares at £0.0001 - 500,000 each, £100 of capital in total. Their seed round a year later raises £500,000 at a £2m pre-money valuation: £2.00 per share, so the investor subscribes for 250,000 new shares and holds 20% of the enlarged 1,250,000.
Each new share is £0.0001 of nominal capital and £1.9999 of premium - the floor never comes close to mattering. Had they incorporated with 100 £1 shares instead, the price per share would have been £20,000, a promised 0.25% advisor stake would equal a quarter of a share, and they would be subdividing mid-round to close.
Where founders go wrong
Issuing £1 shares because it feels tidy
- you have set a £1 price floor under every future share issue for zero benefit.Confusing nominal value with valuation
- investors price the company, not the label; a £0.0001 share is not a penny stock.Combining a big count with £1 nominal
- 1,000,000 shares at £1 means £1,000,000 to pay up; at £0.0001 it is £100.Leaving subdivision until a round is live
- it is easy admin in a quiet month and a critical-path delay during one.
Related questions
How many shares should I issue alongside a small nominal value?
Founders commonly pair a tiny nominal value with a round count - 10,000 or 100,000 shares - so the total capital stays around £100 while percentages stay clean. With 100,000 shares in issue, 1% is a tidy 1,000 shares - useful for options, advisors and investor maths. [More: How many shares should I issue when incorporating a UK startup?]
Do I actually have to pay the nominal value?
Yes - nominal value is the minimum the company must receive for each share, either paid on issue or recorded as unpaid and owed. That is the practical argument for tiny values: a million shares at £0.0001 cost £100, while the same count at £1 would mean £1,000,000.
Can I change a share's nominal value later?
Yes. Subdivision splits each existing share into several of smaller nominal value - each £1 share becoming a thousand £0.001 shares - without changing anyone's percentage. It needs a shareholder resolution and Companies House filings, so it is admin best done before a round, not during one.
Does a low nominal value make my company look cheap?
No. Nominal value is a legal label, not a valuation - investors price your company on its prospects and pay the difference over nominal as share premium. A £2.00 issue price on a £0.001 share is entirely normal - sophisticated investors read it as standard startup plumbing.
Nominal value is a thirty-second decision at incorporation that quietly shapes every share issue, option grant and round that follows - and the wrong choice only reveals itself under deal pressure. A SuLe solicitor can help you pair the right nominal value with the right share count before you file. Book a free 15-minute consultation about your setup
Keep reading: How many shares should I issue when incorporating a UK startup? · Should I use model articles or bespoke articles of association? · What legal documents does a UK startup actually need? · Can I change my company's articles after incorporation? · How do I issue new shares in a UK company? · What exercise price should EMI options have?
Primary sources: Companies Act 2006 · GOV.UK - Set up a private limited company
