Legal Definitions - no par

Definition: Stock issued without a specific value assigned to it. For accounting purposes, it is given a legal or stated value that has little or no connection to the stock's actual value.

Example: A company issues 1000 shares of no par stock. The company's board of directors decides to assign a legal value of $1 per share. This means that the company's total capital is $1000. However, the actual value of the stock may be higher or lower than $1 per share.

Explanation: No par stock is a type of stock that does not have a specific value assigned to it. Instead, it is given a legal or stated value for accounting purposes. This value may not reflect the actual value of the stock. For example, a company may issue 1000 shares of no par stock and assign a legal value of $1 per share. However, the actual value of the stock may be higher or lower than $1 per share. This allows companies to have more flexibility in setting the value of their stock and can make it easier to issue new shares in the future.