Par value

What is par value?

Par value is the nominal, minimum legal value assigned to a share in a company's charter, often something tiny like $0.0001. It's an accounting and legal formality, not what the stock is actually worth. Shares can't be issued below par, and in Delaware par value feeds into the franchise-tax calculation.

Why it matters for fast-growing companies

Par value trips up founders because it looks like it should mean something and it doesn't, it has nothing to do with your valuation or share price. Where it does bite: Delaware's franchise tax has a method based on par value and authorized shares, so a high par value or a huge authorized count can inflate the bill. Keep par value low.

Related terms

• Fundraising & equityFully diluted sharesFully diluted shares count every share that could exist if all options, warrants, convertible notes, SAFEs, and the unissued option pool converted into stock, not just the shares outstanding today.
• Fundraising & equityCapitalization table (cap table)A capitalization table (cap table) is a record of who owns what in a company, every share, option, warrant, and convertible security, listed by holder and class.
• Fundraising & equityDilutionDilution is the reduction in your ownership percentage when a company issues new shares, typically in a funding round or when expanding the option pool.
• Tax & creditsDelaware franchise taxDelaware franchise tax is an annual tax on Delaware C-corps, due March 1, calculated two ways: the Authorized Shares Method (minimum $175) and the Assumed Par Value Capital Method (minimum $400).

Frequently asked questions