Whenever a company issues shares to various investors there is a certain price that is paid by the investor.
The price that is paid depends on the value of the company at that point of time,
The investor might have to pay a figure that is higher than the face value of the share.
For example a company might issue shares at Rs 35 when the face value if Rs 10.
In this case the extra amount above the face value which is Rs 25 is the premium that is present on the share.