Simple English definitions for legal terms
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No par stock is a type of stock that is issued without a specific value assigned to it. Instead, it is given a legal or stated value that may not reflect its actual value. This type of stock is often used for accounting purposes and may have little or no connection to its true value.
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.