What is Par Value?
Par value is the nominal or face value assigned to a stock. Par value is often no longer required and does not necessarily reflect the amount paid for stock nor its market value. Par value does not represent the redemption amount for redeemable shares. It is still used by some states however as a method to calculate the capitalization (Par Value multiplied by number of shares issued) of the corporation.
A business entity must sell shares of stock in order to capitalize the entity, that is, provide the entity with its own capital, separate from the money of its owners. This separation provides part of the support for shielding the shareholders from personal liability for the debts and obligations of the entity. Shares of stock sold by the entity represent proportionate ownership interests held by shareholders in the entity. “Par value” is a dollar value assigned to shares of stock which is the minimum amount for which each share may be sold. There is no minimum or maximum value that must be assigned. Shares may also have “no par value,” which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued. There is no minimum number of shares that must be authorized in the articles of incorporation. One or more shares may be authorized. However, the entity may not sell more shares than it is authorized to issue and it must receive consideratio
“Par value” is the minimum price for which each share may be sold. For a company with shares of “no par value,” the board of directors sets the minimum value for which a share may be sold. The original purpose for declaring par value was to determine the initial state filing fee. Now, many states do not base the filing fee on the minimum allowable value. The sale of shares raises capital for the corporation, allowing corporate funds to remain separate from individual shareholders’ or directors’ funds. There is no minimum number of shares that must be issued but a company may only issue the maximum number of shares approved in the articles of incorporation or as amended. Back to the top Must I file a D.B.A. (‘Doing Business As’)? A corporation or LLC generally does not need to file a DBA. Filing a DBA does not change the name of your business but allows the company to operate under one or more names in addition to its corporate name. For example, if you would like Bob’s Painting, Inc. t
In finance, par value is the least amount that a share of stock can be sold for, according to the terms and conditions that are found in the regulations of the issuing company. In most cases, the par value will also be the initial trading price for the stock when it is introduced in the market place. However, the expectation is that the par value for the stock will shortly be exceeded by a higher market price. It is important to remember that the establishment of a par value for a stock offering is essential to the basic structure of any stock. By establishing the minimum amount or price that a stock can be traded, the company makes places a limit on how far the stock can fall before being removed from active trading. This helps protect the company from any attempts to devalue the stock below a certain point and thus make it possible for raiders to acquire cheap stock and a controlling interest in the corporation. At the same time, the designation of a par value does not in any way inh
Par value is the minimum price per share that shares must be issued for in order to be fully paid. I typically recommend that par value be set at $0.001 or $0.0001 per share. Thus, if a founder purchases 8,000,000 shares of common stock, the minimum price that the founder has to pay is $8,000 at $0.001 per share or $800 at $0.0001 per share. Par value can even be set lower, such as $0.00001 per share, in order to minimize the amount paid for founders. Some states, like California, allow for no par value shares.
