Stock Par Value On Balance Sheet

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

The document details a proposal by the Board of Directors of the Bank of Granite Corporation to amend the Articles of Incorporation, specifically to reduce the par value of the corporation's common stock from $5.00 to $1.00 per share. Par value is defined as the nominal value representing a shareholder's interest in a share of stock. The proposed change aims to enhance the corporation's flexibility in issuing stock dividends and executing stock splits without depleting its Surplus Account. Notably, while the par value will decrease, it will not alter the actual market value of the shares or affect the total shareholder's equity. The document outlines the distinctions between the Capital Account and Surplus Account, emphasizing that the par value is more relevant for accounting and corporate law compliance rather than reflecting current stock market prices. Attorneys, partners, owners, associates, paralegals, and legal assistants should understand the implications of the proposed change for corporate governance and stockholder dividends, as the resolution requires stockholder ratification. This amendment not only facilitates smoother financial operations but also serves as a strategic move to bolster shareholder relations by allowing for potential stock distributions in the future. The Board recommends a favorable vote on the change to ensure the corporation can effectively manage its capital structure and meet shareholder needs.
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FAQ

On the balance sheet, the par value of outstanding shares is recorded to common stock, and the excess (that is, the amount the market price adds to par value) is recorded to additional paid-in capital. The sum of common stock and additional paid-in capital represents the paid-in capital.

Par value, also known as nominal or original value, is the face value of a bond or the value of a stock certificate, as stated in the corporate charter. Stock certificates issued for purchased shares show the par value.

Par value is the value of a single common share as set by a corporation's charter. It is not typically related to the actual value of the shares. In fact it is often lower. Any stock certificate issued for shares purchased shows the par value. When authorizing shares, a company can choose to assign a par value or not.

The par value is the minimum price at which a corporation can legally sell its shares, and most are priced below $0.01. As a real-life example, Apple (NASDAQ: AAPL) has set its common stock's par value at $0.00001 per share.

You can find the par value of a company's stock by examining the shareholder's equity section of the business's balance sheet. There you'll also find additional paid-in capital. Paid-in capital increases when the company issues shares to investors who pay more than par value, like in an initial public offering (IPO).

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Stock Par Value On Balance Sheet