Par Value
/pɑː ˈvæljuː/
Par value is the nominal face value assigned to a share of stock as stated in the company's constitutional documents.
Par value is the nominal face value assigned to a share of stock as stated in the company's constitutional documents.
Par value is the minimum price a company can legally sell its shares for.
Think of it as a floor price that protects people who lend money to the company - it ensures shares can't be sold too cheaply.
Par value has nothing to do with what shares are actually worth or what people pay for them.
The market value changes constantly based on how well the company is doing and whether people want to buy the shares.
Par value stays the same and is written into the company's official documents.
Companies need par value because the law requires it, and it gives them a starting point for working out their share capital.
It also sets the minimum amount they must receive when selling new shares to investors.
You can't legally sell shares for less than par value.
If company directors try to do this, they could end up personally paying the difference, so they need to make sure they always sell shares at or above par value.
Par value shows up on the balance sheet under share capital - it's the par value multiplied by how many shares exist.
If the company sold shares for more than par value, that extra money goes in a separate section called share premium.
Yes, but they need to pass a special resolution and file the right paperwork with Companies House.
They might split existing shares into smaller ones or combine them into larger ones with different par values.
No, par value doesn't affect how much dividend you get.
Dividends depend on company profits and what the board decides to pay out, not on the par value of the shares.
