What is the difference between “par” and “no par” stock, and how much stock do I need?
Par value stock has a minimum stated selling price. It can be sold for more, but not less than the stated “par” value. No par value stock has no minimum selling price and can be sold for whatever an investor is willing to pay. Unless we are instructed otherwise, American Incorporators will file your new corporation with the minimum amount of authorized shares of no par value stock, so you qualify for the minimum incorporating fee or minimum annual franchise tax.
A business corporation must sell shares of stock in order to capitalize the corporation, that is, provide the corporation 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 corporation. Shares of stock sold by the corporation represent proportionate ownership interests held by shareholders in the corporation. “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. It is generally recommended to request the minimum amount of authorized shares of no par value stock in order to qualify for the minimum incorporating fees and annual franchise tax.
Par value stock has a stated value on its face. No par value stock has no stated value and its worth depends on what an investor is willing to pay. Unless we are instructed otherwise, IBS Corporate Services always requests the minimum amount of authorized shares of no par value stock, so you qualify for the minimum incorporating fee or minimum annual franchise tax.
