PosiStep 3: Shares and ownership: face value, outstanding shares, promoters
You know that a share is a piece of a company. This PosiStep looks closer: how many pieces there are, who holds them, what the "face value" printed on a share means, and what rights come with owning one.
Outstanding shares: how many pieces exist
Outstanding shares are all the shares a company has issued that are held by investors, founders and institutions. Your part of the company is your shares divided by the outstanding shares.
The number can change: it goes up when a company issues new shares or gives bonus shares, and down when it buys back its own shares. PosiStep 9 explains these corporate actions.
Face value is not the share price
Every Indian share has a face value (also called par value), a small fixed amount such as ₹1, ₹2, ₹5 or ₹10 set when the shares are created. Infosys shares have a face value of ₹5, yet they trade for well over ₹1,000.
The face value is mostly an accounting figure. Dividends in India are sometimes announced as a percentage of face value, but what you pay and receive in the market is the market price. In the US, par values are often tiny, such as a fraction of a cent, and rarely matter to investors.
Who owns the shares: promoters, institutions and the public
In India, the founders or controlling group of a company are called promoters. Companies report how many shares promoters hold every quarter. A promoter holding of, say, 55% means the promoter group owns more than half the company.
The rest is held by institutions (mutual funds, insurance companies, foreign investors) and the public, which includes individual investors like you. In the US the word "promoter" is not used; founders and top managers are called insiders. PosiStep 10 looks at institutions and promoter pledging in detail.
What a shareholder gets
Owning shares usually brings three things: a share of the profits the company pays out as dividends, the right to vote on important decisions at shareholder meetings (one vote per share for ordinary shares), and a claim on the company's value, which shows up as the share price.
A shareholder does not run the company day to day and is not personally responsible for its debts. The most you can lose is what you paid for the shares.
Where PositoAI fits
The Pattern tab on a company page shows its shareholding pattern over recent quarters: how much is held by promoters, foreign institutions (FII), domestic institutions (DII) and the public, and whether any promoter shares are pledged.
Key terms
- Outstanding shares
- All issued shares held by investors; your part of the company = your shares ÷ outstanding shares.
- Face value (par value)
- A small fixed amount per share set at creation; not the market price.
- Promoter
- In India, the founder or controlling group of a company.
- Insider
- In the US, founders, directors and top managers who own shares.
- Shareholding pattern
- A breakdown of who owns a company's shares: promoters, institutions and the public.
- Voting right
- A shareholder's say on major decisions, usually one vote per ordinary share.
Try it
A made-up company, Neel Pharma, has 50 lakh (5,000,000) outstanding shares. Its promoter group holds 30 lakh of them. What is the promoter holding?
30 lakh ÷ 50 lakh = 0.6, which is 60%. The promoter group owns more than half of Neel Pharma, so it controls most shareholder votes.
See it live on PositoAI
Open Infosys on PositoAI and click the Pattern tab. Find the promoter holding in the latest quarter, and check whether it rose or fell compared with a year earlier.
What this does not tell you
A high or low promoter holding is not good or bad by itself. Some excellent companies have low promoter holding, and a high holding with pledged shares can be a risk. Face value tells you almost nothing about a company's worth.
Quick quiz
What are outstanding shares?
Outstanding shares are all issued shares held by everyone: promoters, institutions and the public.
Infosys has a face value of ₹5 per share. What does that tell you about its market price?
Face value is a fixed accounting amount. The market price is decided by trading and can be far higher or lower.
In India, who are the promoters of a company?
Promoters are the founders or controlling group, and companies must report their holding every quarter.
What is the most a shareholder can lose?
Shareholders are not personally responsible for the company's debts; the most they can lose is what they paid.
Which PositoAI tab shows a company's shareholding pattern?
The Pattern tab shows promoters, FII, DII, public holding and pledged shares over recent quarters.
Answer every question on this page correctly to complete this PosiStep.
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PosiCourse is for education only. It does not recommend buying or selling any share. Examples with made-up numbers are not real companies. PositoAI is for research and education only and is not investment advice.