Question

Par value system of shares is

• A. no more applicable in India
• B. applicable in India
• C. applicable in India in selected cases
• D. none of these

Hint:

Remember that SEBI let companies fix their own face value, so the old compulsory par value rule does not bind Indian companies anymore.

Answer 1

The Correct Option is A

The "par value" of a share is the face value printed on the share certificate, for example Rs 10 or Rs 100 per share. Older Indian company rules fixed this face value and let it decide certain rights and calculations. From 1999, SEBI relaxed this rule and let companies choose any face value they want (Rs 1, Rs 2, Rs 5, Rs 10, and so on) when they issue new shares. Let's check what this means for each option.

1. no more applicable in India: Once companies got the freedom to pick their own face value, the older fixed par value system stopped being compulsory. Companies today issue shares at whatever face value they choose. This matches the current reality.
2. applicable in India: This would mean the old fixed par value rule is still compulsory for every company, which is not true anymore.
3. applicable in India in selected cases: The rule was not kept for only some cases; it was removed for share issues in general once the face value was made a free choice.
4. none of these: Not needed, since one of the given options already fits.

Because Indian companies are now free to set their own face value, the mandatory par value system is no longer applicable. So the correct option is "no more applicable in India".

Let's summarize:

• Par value is the fixed face value once printed on shares by rule.
• SEBI's reform let companies choose their own face value, so the compulsory par value system is gone in India.

The answer is option (1), no more applicable in India.