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EYK151 - E x t e n d Yo u r K n o w l e d g e 1 5 1 Par...

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E x t e n d Y o u r K n o w l e d g e 1 5 - 1 : P a r V a l u e S h a r e s The Canada Business Corporations Act and its more recently passed provincial counterparts require that all shares be of no par or nominal value. These acts also require that the total consideration received by the corporation for each share issued must be added to the stated capital account maintained for the shares of that class or series. Some provinces still permit the issuance of par value shares. Par value is an arbitrary value a corporation places on each of the corporation’s shares. When a corporation issues par value shares, the par is printed on each certifi- cate and is used in accounting for the shares. If the shares are issued at par, the entry to record the issue is the same as if the shares were no par value. If the shares are issued at a price above the share’s par value, the shares are said to be issued at a premium. For example, if a corporation sells and issues its $10 par value common shares at $12 each, the shares are sold at a $2 per share premium.
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