No-par stock is
stock
Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...
issued with no
par value
In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (at the par value), over par (over par value) and under par (under par value).
Bonds
A bond selli ...
given in the
articles of incorporation
Article often refers to:
* Article (grammar), a grammatical element used to indicate definiteness or indefiniteness
* Article (publishing), a piece of nonfictional prose that is an independent part of a publication
Article(s) may also refer to:
...
or
stock certificate
In company (law), corporate law, a stock certificate (also known as certificate of stock or share certificate) is a legal document that certifies the legal interest (a bundle of several legal rights) of ownership of a specific number of share ...
. This is in contrast to stocks issued with a par value - a value for which the stock is redeemable to the issuing company
- set at the time of issuance.
In practice, the par value is the lowest price for which a stock can be sold, as prices lower than the par value would be redeemed to the issuing company. In contrast, the value of no-par stocks relies completely on the market, without this minimum price guarantee.
Traditionally, the par value is set to be the same as the amount invested. However, in modern practice, the par value is set to a very low value (e.g. US$0.01 or US$0.00001) or not set at all.
Some U.S. states (e.g. California) does not have the concept of par values, whilst some other U.S. states (e.g.
Delaware
Delaware ( ) is a U.S. state, state in the Mid-Atlantic (United States), Mid-Atlantic and South Atlantic states, South Atlantic regions of the United States. It borders Maryland to its south and west, Pennsylvania to its north, New Jersey ...
) does. In the latter states, whether the stock is par or no-par affects the calculation of the annual franchise tax.
See also
*
Corporation
A corporation or body corporate is an individual or a group of people, such as an association or company, that has been authorized by the State (polity), state to act as a single entity (a legal entity recognized by private and public law as ...
*
Incorporation
*
Stock
Stocks (also capital stock, or sometimes interchangeably, shares) consist of all the Share (finance), shares by which ownership of a corporation or company is divided. A single share of the stock means fractional ownership of the corporatio ...
*
Par value
In finance and accounting, par value means stated value or face value of a financial instrument. Expressions derived from this term include at par (at the par value), over par (over par value) and under par (under par value).
Bonds
A bond selli ...
References
Equity securities
Stock market
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