Par Value vs No Par Value Shares Explained | Definitions, Differences & Company Law

📌 In today’s video, we dive deep into Par Value vs No Par Value Shares 📊 — a key concept in corporate finance, company law, and investing. If you’re a business owner, shareholder, or student of finance, understanding these two share structures will help you make better decisions in investment, governance, and compliance.

📅 Video Chapters
⏱ 0:00 – Disclaimer & Intro
⏱ 0:55 – What is Par Value?
⏱ 3:09 – What is No Par Value?
⏱ 4:56 – Par Value Shares
⏱ 6:24 – No Par Value Shares
⏱ 8:50 – Par Value & Company Law
⏱ 15:46 – Important Disclaimer

💡 Par Value Explained:

Par value (also called nominal value, face value, or original value) is the minimum legal value assigned to a share, stated in the company’s constitutional documents or printed on a share certificate.

✔️ Sets the minimum price shares can be issued 🏦
✔️ Protects investors from unfair pricing
✔️ Often a small fixed amount (e.g., $0.01 or $1)

📜 In some jurisdictions, companies must set a par value, ensuring shares are not issued below this threshold.

Why it matters: Par value forms a legal agreement between shareholders and the company. If shareholders pay the full par value, creditors generally cannot demand more in case of company insolvency — thanks to limited liability.

📘 No Par Value Explained:

No par value shares have no fixed nominal value in the company’s records or on the share certificate. Instead, their price is determined by market forces and factors like:

✔️ Investor demand 📈
✔️ Board decisions 🏢
✔️ Company performance 💼

Why companies choose no par value:

🔹 Reduces potential liability to shareholders if the business faces financial difficulties
🔹 Offers flexibility in pricing shares
🔹 Common in modern corporate structures

📊 Par Value Shares in Practice:
For par value shares, multiplying the par value by the number of issued shares gives the company’s minimum legal capital. This does not reflect market value, which may be much higher. Par value is often set as low as possible to comply with legal requirements while giving the company flexibility in fundraising.

⚖️ Par Value vs No Par Value – Key Differences:

Feature Par Value Shares 📜 No Par Value Shares 🔓
Fixed Minimum Value ✅ Yes ❌ No
Stated in Documents ✅ Yes ❌ No
Price Determined By Legal documents Market forces
Liability Protection Yes (based on par value paid) Yes (based on purchase price)
Common Usage Traditional companies Modern flexible companies

🎯 Investor Takeaways:

💡 Par Value Shares → Better for jurisdictions requiring fixed nominal values and clear legal capital.
💡 No Par Value Shares → Greater flexibility in fundraising and pricing without a fixed legal minimum.

Both have their pros and cons depending on jurisdiction, company structure, and shareholder agreements.

✅ If you found this video helpful:

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💬 Comment: Do you prefer Par Value or No Par Value shares?
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📚 Related Videos on This Channel:

Ordinary Shares vs Preference Shares 📊
Shares Outstanding vs Issued Shares 💼
What is a Shareholder? 🏢

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