Share With No Par Value

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Multi-State
Control #:
US-CC-3-215A
Format:
Word; 
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The form titled 'Changes Affecting Capital Stock' outlines a proposal to amend the Articles of Incorporation of Bank of Granite Corporation, reducing the par value of its common stock from $5.00 to $1.00 per share. This amendment is intended to enhance the corporation's flexibility in declaring stock dividends and stock splits, while maintaining compliance with state corporation law. The document explains the significance of par value in relation to a stockholder's interest and the limitations it imposes on the corporation's capital and surplus accounts. It provides detailed instructions for shareholders regarding the importance of the vote on this proposal, emphasizing that the change in par value will not affect the total shareholder equity or the market value of the shares. The form serves as a critical tool for corporate attorneys, partners, owners, associates, paralegals, and legal assistants, as it aids in navigating the procedural requirements of corporate governance and ensures informed decision-making for stakeholders. Users should carefully review the rationale for the par value adjustment and its implications for future corporate distributions.
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FAQ

No-Par Value Stock Example. Imagine a company issues 100,000 shares of stock at $15/share. The company has decided to issue no-par stock. As part of the sale, the company received $1.5 million (100,000 shares * $15/share).

If a company has sold no-par-value stocks, the proceeds from the transaction will be credited to the common stock account only. Hence, the accounting entry will be a debit to cash and credit to the common stock account.

Meaning of no par value in English if company shares have no par value, they have no stated value or price when they are made available for the first time: The trustees are issuing an unlimited number of shares of beneficial interest, with no par value.

No-par stocks are those where the value of the stocks relies completely on the market, not at all based upon any guaranteed value (the par value) set at the issuance of the stocks.

Example of Stock with No Par Value If a corporation is not required to have a par value (or a stated value) for its common stock and the corporation issues 100 shares for $2,000, the accounting entry will debit Cash for $2,000 and will credit Common Stock for $2,000.

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Share With No Par Value