Share Capital Without Par Value

State:
Multi-State
Control #:
US-CC-3-215A
Format:
Word; 
Rich Text
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Description

The document outlines a proposal to amend the Articles of Incorporation of Bank of Granite Corporation by changing the par value of the corporation's common stock from $5.00 to $1.00 per share. Share capital without par value allows for greater flexibility in managing common stock, which is essential for corporations aiming to issue stock dividends or engage in stock splits. The document details the importance of understanding capital accounts and surplus accounts, as these terms affect a corporation's financial operations and shareholder distributions. Guidance on filing and editing includes ensuring all documents are accurately completed and submitted for approval by stockholders. This amendment is particularly relevant to attorneys, partners, owners, associates, paralegals, and legal assistants, as it impacts corporate governance, compliance with state laws, and shareholder finance strategies. By lowering the par value, the corporation enhances its ability to respond to financial needs without affecting the total shareholder equity, which remains unchanged. The proposed change does not alter the actual market value of shares but facilitates corporate financial management, making it a strategic decision for the company.
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FAQ

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.

No-par value stock doesn't have a redeemable price, rather prices are determined by the amount that investors are willing to pay for the stocks on the open market. Most shares issued today are identified as being either no-par value or low-par value stock.

Par value, which is also called par, nominal value, or face value, is the amount at which a security is issued or can be redeemed. No-par value stock doesn't have a redeemable price, rather prices are determined by the amount that investors are willing to pay for the stocks on the open market.

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.

Par value is the minimum share price, while market value is the current trading price. Par value is set in the certificate of incorporation. For most startups, the par value is set incredibly low, generally $0.0001 or $0.00001 per share.

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Share Capital Without Par Value