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Par Value for a Startup Company?s Stock

By Ryan Roberts

Par value is the minimum price that a corporation can issue its shares. While I typically see par values of either $1 or “no par value” when looking at startups that have incorporated on their own, I recommend that par value be set at $0.01 to as low as $0.00001. My recommendation is based on my belief that startups should authorize 10,000,000 shares of common stock and issue around 8,000,000 to 9,000,000 shares to its founders.

Therefore, if your startup issues 8,000,000 shares with a $0.001 par value, the minimum the founders would have to pay for those shares is $8,000.

As a practical matter, I recommend that founders shares be issued at some multiple of par value. This multiple should be a whole number greater than 1. Thus, if for some reason you have to execute a forward stock split, your startup may not have any par value issues.

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Full post as published by The Startup Lawyer on October 11, 2008 (boomark / email).