Corporate and Business Law > FAQ about Shares of Stock
 

What are Shares of Stock?

Shares of stock are written articles that represent the amount of money invested in the corporation by an individual shareholder. Each share represents ownership in the company, and it entitles the holder to certain types of rights including voting rights and dividends.

What is Par Value?

"Par value" is a dollar value assigned to shares of stock, which is the minimum amount for which each share may be sold. Shares may also have "no par value," which means that the Board of Directors will assign a value to the stock below which the shares cannot be issued.

What's the Difference Between Issued and Authorized Shares?

The board of directors controls the issuance of stock. But the shareholders set the number of shares the directors are allowed to issue. Authorized shares is the total number of shares of stock that the board of directors are "authorized" to issue to shareholders. Authorized shares become issued shares when "issued" or distributed to a stockholder.

What is a Dividend?

A dividend is a special payment made in cash or additional stock to the shareholders based on the profits made by the corporation.

How is the face value of the shares related to the value of the company?

Valuation of a company is based on sales, market value of the assets, customer list and goodwill of the company. Par Value is usually much lower than the current valuation of the stock.