Capital Stock
Par is an arbitrary value established by the incorporators and stated in the corporate charter.
- Par is used as an accounting device. It is not directly related to the market price of the share!
- When shares are issued at par no premium or discount arises.
- When shares are issued above par, premium or additional paid-in capital arises.
- When shares are issued below par, discount arises (initial issuance only); gives rise to a contingent liability. (Rare)