No-par Stock

In various states of USA, many corporations have been formed with stock without par value. In the case of no par stock, the aggregate ownership is divided into shares. The dividend on these shares are paid at the rate of so many cents or dollars per share instead of paying a percentage on the par value of the share. The first no-par law was passed in New York in 1912 and other states followed it. No-par values shares have also been issued in Canada.

The principal reason for the authorization of no-par shares was the desire to remove restrictions upon the selling price of newly issued shares. Par values shares cannot be sold below the par value without subjecting the buyer to liability for the deficiency. But no-par value stock can be sold at any price, except where the statutes prescribe a minimum price.