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why would a company issue common stock with par value?



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why would a company issue common stock with par value?

5 Answer(s)


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PAR VALUE IS THE MINIMUM AMOUNT THAT A COMPANY IS FIX FOR THE SHARE
PER VALUE MULTIPLIED BY NUM OF SHARES IS KNOWN AS SHARE CAPITAL RESERVE

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it is the minimum price at which share is issued.it canbe done to attract the investor it pave the way as a safeguard tools.

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thanks Ejazul for your quick answer. However, why would a company issue common share with par value when it can gets much more if it sells at market price. for example HAL share has never been less than $28 in year 2010 or 2011 but if you see below [ from balance sheet] company sells the share at par value.

Year 2011 2010
Common shares, par value $2.50 per share – authorized 2,000 shares, issued
1,073 shares and 1,069 shares 2,683 2,674
Paid-in capital in excess of par value 455 339

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Mattews, still waiting for the answer.

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Yasar, Shares are always priced like this -> Par value + Share premium = Market Value.
No company ever gives away its shares at par value if the market value is higher. In the above example you quoted the line item "Paid-in capital in excess of par value" reflects the share premium and hence combined with the par value indicates the market value.

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