Limited Company Shares: The Total Aggregate Value

When you form a limited company, you'll be asked about your share structure: how many shares the company will issue and what each one is worth. From those two numbers comes the total aggregate value, a figure that sounds more complicated than it actually is.

This guide explains what total aggregate value means, how to work it out, and what decisions you'll need to make around shares when setting up your company.

Key Takeaways

• The total aggregate value is simply the number of shares multiplied by the value of each share.
• If a company has more than one class of shares, calculate the total value of each class separately and add the figures together.
• Most small limited companies start with 100 ordinary shares at £1 each, giving a total aggregate value of £100.
• The nominal value of a share is not the same as what the share is actually worth. A company can be worth far more than its total aggregate value suggests.
• Shares determine ownership, voting rights, and how profits are distributed. Getting the structure right at the start matters.
• You can issue more shares after formation, but changes need to be recorded and reported to Companies House.

What Is Total Aggregate Value?

It's the total nominal value of all shares issued by the company. Multiply the number of shares by the value of each share and you have it.

A company with 100 shares worth £1 each has a total aggregate value of £100. A company with 10 shares worth £2 each has a total aggregate value of £20.

If the company has more than one class of shares, work out the total value of each class separately and add everything together. Fifty ordinary shares at £1 each and fifty preference shares at £1 each gives a total aggregate value of £100.

Nominal Value vs Market Value

The nominal value, sometimes called par value, is the face value assigned to a share at formation. It's a fixed legal figure and doesn't change unless the company takes formal steps to alter it.

This is different from the market value of a share, which reflects what someone would actually pay based on the company's assets and performance. A company could have a total aggregate value of £100 on paper but be worth considerably more if the business is doing well. The nominal value matters for legal and accounting purposes, not as a measure of what the business is actually worth.

How Do Most Small Companies Structure Their Shares?

The most common setup for a new small limited company is 100 ordinary shares at £1 each. It's clean, simple, and easy to work with. Each share represents 1% of the company, which makes dividing ownership between founders straightforward.

There's no requirement to use this structure. You could issue 1 share at £1 or 1,000 shares at £0.01 each and arrive at different total aggregate values. What matters is that the structure works for your situation and is set up correctly from the start.

What Are the Different Classes of Shares?

A company limited by shares can issue more than one type, or class, of share. Each class can carry different rights around voting, dividends, and what happens to the shares when the company is wound up.

The main classes are:

• Ordinary shares. The standard share type for most small companies. Ordinary shareholders typically have the right to vote on company decisions and receive dividends in proportion to the shares they hold.
• Preference shares. These usually give shareholders a priority right to receive dividends before ordinary shareholders, and often a fixed dividend rate. They may or may not carry voting rights, depending on how they're set up.
• Redeemable shares. Shares that can be bought back by the company at a future date, either at the company's option or the shareholder's. These are sometimes used for employee share schemes or to bring in short-term investors.

Most straightforward owner-managed companies stick to ordinary shares. The more complex the share structure, the more important it is to take professional advice before setting it up.

Why Does the Share Structure Matter?

Shares aren't just an administrative formality. They determine who owns the company, who gets a say in how it's run, and how profits are distributed.

Ownership and control. Whoever holds the majority of voting shares controls the company. If you and a co-founder each hold 50% of the shares, you have equal say in decisions. If one of you holds 60% and the other 40%, the majority shareholder has more control. Getting this right from the start avoids problems later.

Dividends. Dividends are paid to shareholders in proportion to the shares they hold within the same share class. The share structure therefore directly determines how profits are distributed between owners.

Future investment. If you want to bring in outside investors at some point, they'll want shares in the company. Having a clear, well-structured share setup makes that process considerably more straightforward than trying to restructure things after the fact.

Succession and exit. Shares can be transferred or sold, but the process needs to be handled correctly and recorded. How shares are structured affects how easy or complicated it is to change ownership later.

Can I Issue Shares After Formation?

You can issue additional shares after the company is formed. The process requires a directors' resolution, an update to the shareholder register, and notification to Companies House.

For most small companies, the share structure set at formation stays in place for years. But if you're planning to grow, bring in investors, or offer shares to employees, it's worth thinking about how the structure might need to evolve rather than treating it as a one-time decision.

Our company share services can help if you need to transfer shares or update your share structure.

FAQs

What is the total aggregate value of shares?

It's the total nominal value of all shares the company has issued: number of shares multiplied by value per share. If there are multiple share classes, calculate each separately and add them together.

What nominal value should I give my shares?

There's no legal requirement. Most small companies use £1 per share as it keeps things simple. You could use £0.01 or another figure, though the total aggregate value will vary accordingly.

How many shares should I issue?

For most small companies, 100 ordinary shares at £1 each is a practical starting point. It gives a clean total aggregate value of £100 and makes ownership percentages easy to work with. If you're setting up with co-founders or planning to issue shares later, a larger pool from the start can be useful.

Is total aggregate value the same as what my company is worth?

No. It's based on the nominal value of shares, which is a fixed legal figure unrelated to the commercial value of the business. A company with a total aggregate value of £100 could be worth considerably more.

What's the difference between ordinary and preference shares?

Ordinary shares give holders voting rights and dividend entitlement in proportion to their shareholding. Preference shares typically give holders a priority right to dividends, often at a fixed rate, but may not carry voting rights. The exact rights depend on the company's articles of association.

Can I change the share structure after formation?

Yes. Issuing new shares requires a directors' resolution and notification to Companies House. Transferring existing shares also needs to be properly documented. Our company share services can assist with this.

Do I need to pay for shares when I form the company?

Shares need to be paid for at their nominal value as a minimum. For most small companies that means £1 per share, paid when the company is formed.

What happens to shares if a shareholder leaves?

This depends on the company's articles of association and any shareholders' agreement in place. Without an agreement, the default rules apply, which may not reflect what you want to happen. A shareholders' agreement is strongly recommended for companies with more than one owner.

This article is for general information only and does not constitute legal or financial advice. Share structures can be complex and the right approach depends on your circumstances. Speaking to a qualified accountant or solicitor before making decisions about your company's shares is advisable.