No-par stock

Definition

No-par stock is a type of stock that is issued without a par value. This means the company does not assign a minimum price at which the stock can be sold upon issuance.

5 Must Know Facts For Your Next Test

1. No-par stock allows companies greater flexibility in setting pricing for their shares.
2. It eliminates the need for companies to maintain a par value account on their balance sheet.
3. Shareholders of no-par stock have the same rights and privileges as those with par value stocks.
4. The lack of par value does not affect the overall market value of the shares.
5. Many modern corporations prefer issuing no-par stock to avoid legal complications associated with setting and maintaining a par value.

Related terms

Par Value Stock: Stock issued with an assigned nominal face value per share.

Stated Value: An arbitrary amount assigned by the board of directors to no-par stock, often used for internal accounting purposes.

Authorized Shares: The maximum number of shares that a corporation is legally permitted to issue, as specified in its charter.