“Stock Par Value” is a nominal value given to a class of stock, and it represents the lowest price at which a corporation could sell those shares. Some states require you to state your stock par value when filing Articles of Incorporation to create a C Corporation.
A corporation can decide on the par value of its shares, and it will typically set the par value at a very low amount. In many cases, par value may be one dollar or one cent. Stock par value can also be called “Face Value,” “Nominal Value,” “Stated Value” or “Common Stock's Legal Capital.”
How Is Stock Par Value Calculated?
An individual share’s par value is determined by the corporation when it is created. To calculate the total par value of all of a corporation’s stock, simply multiply the total number of shares by the par value. The par value of a share will be the same for each one in that particular class of stock.
When you incorporate your C Corporation with Incfile
, we calculate stock par value using the following method: Unless you specify otherwise, Incfile will authorize 1500 shares (because 1500 is easily divisible by 2, 3, 4, 5 and 6) with a par value of one cent, or at no par value if not required by your state.
What Does “No Par Value” Mean?
A stock with “no par value” has a par value of zero.
Can a Share Have a Par Value of Lower Than One Cent?
Some corporations decide to set their par value in fractions of a cent. Theoretically, a corporation could set a par value of $0.0001 or lower.
What’s the Difference Between Stock Par Value and Market Value?
Stock par value has nothing to do with the actual value of a company’s stock, which might be determined by profits, price on a stock market or other factors.
How Does Stock Par Value Affect Shareholders in a Corporation?
If a shareholder buys stock in a corporation, they must pay at least the par value to obtain each share. The board of a corporation may require shareholders to pay much more than the par value, especially if the market price or other determined value of the stock is much higher.
Where Does the Par Value of a Stock Need to Be Shown?
The par value of a stock will be included in your Articles of Incorporation (filed when you form your corporation) if required. It will also be listed in a corporate charter, shown on statements of account or balance sheets and printed on physical share certificates. If a stock has no par value, this should be indicated.
Some states do require a par value to be listed; others do not. If a state does not require a par value, Incfile will not set one in the Articles of Incorporation.
Learn More About C Corporations