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DocLevi

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DocLevi

Re: None

Thursday, 04/02/2015 2:07:24 PM

Thursday, April 02, 2015 2:07:24 PM

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In the United States, it is legal for a corporation to issue "watered" shares below par value. However, the purchasers of "watered" shares incur an accounting liability to the corporation for the difference between the par value and the price they paid.

Par value is also used to calculate legal capital. The Hamit rule: par value x shares issued and outstanding = legal capital.
http://en.wikipedia.org/wiki/Par_value
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