• Aggregate Nominal Value and Shares Explained Jan 5, 2021
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    Before starting a new company you must be prepared to undergo thorough research — familiarising yourself with crucial terms in the business glossary. The more you know, the more informed your decisions. And one such term is the “aggregate nominal value” — an important term in relation to company shares.

    Before we look at the aggregate nominal value, it’s important to comprehend the structures of company shares.


    The Definition of Shares

    Shares are a “portion” of a company that is limited by shares and is simply a divided-up unit of the value of a company (each share is a specific percentage of the entire business). The shares owned by individuals of a shareholding company are called “shareholders” or “members”.

    How much of a company is owned or controlled by a member is reflected in the number of shares that the member holds. Typically, shareholders receive a percentage of trading profits in relation to their ownership percentage.


    How Many Shares Can be Issued by a Company?

    One (1) is the minimum number of shares that a company may issue. This is normal when an individual sets up a limited company and is the sole owner and director. There is no upper threshold, therefore you may issue as many shares as you deem necessary during the company incorporation process or after your company has been formed.

    Here are some fairly straightforward examples of popular share structures:

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    The Value of Shares


    Shares have both a market and nominal value — the difference between each is known as a “premium”.

    - Market value

    A share’s market value is simply the amount it is worth at the point of being sold. This figure will invariably differ from the nominal value.

    - Nominal value

    The nominal value of a share, which is typically £1, is the sum that a member has either paid or agreed to pay for their segment/portion of the company. This sum is the reflection of how much a member would legally need to pay towards company debts or when the company suffers a winding up order. Therefore, the “limited liability” of a company’s owners is reflected in the nominal value.


    What Is the Aggregate Nominal Value?

    The Companies Act 2006, as amended by the Small Business, Enterprise and Employment Act 2015 details the contents of the statement of capital. Any electronic or paper submission of the statement of capital must disclose the aggregate nominal value to Companies House.

    The aggregate nominal value of the company’s shares is calculated by multiplying the number of shares in issue by the nominal value of each share. If there are multiple share classes, then each class has to be calculated with the figures subsequently added together.

    For example:

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    What Else Is Included in the Statement of Capital?

    Along with the aggregate nominal value, a statement of capital should include:

    Read the full article for FREE at: https://www.yourcompanyformations.co.uk/blog/aggregate-nominal-value-and-shares-explained/
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