No-Par Value Stock is a type of stock issued without the specification of a par value indicated in a company's articles of incorporation or on its stock certificates. This type of security has become increasingly popular with companies because it allows them to avoid assigning an arbitrary, and potentially misleading, dollar amount to their shares. As such, no-par stocks are often seen as more flexible than other types since they can be valued according to market conditions rather than predetermined figures.The primary benefit associated with issuing no-par value stocks is that it provides businesses with greater financial flexibility when setting prices for their securities. Since there is not an established par value attached to these shares, businesses have the ability to set prices based on current market values instead being limited by reestablished levels like those found in traditional securities offerings . Additionally , this approach may also help reduce volatility since investors will be less likely to make decisions solely based on price fluctuations if there isn't any predetermined level at which they must purchase or sell .Finally , one potential downside associated with issuing no-par stocks involves accounting issues related to taxation and dividends payments . If these matters are not handled properly , then shareholders could end up paying too much tax or receiving inadequate dividend payments due to poor record keeping practices related to their holdings . To mitigate this risk , companies should ensure that all relevant records relating onto - par value shareholdings are kept accurately updated and available for review upon request from taxation authorities or other interested parties who may require access information regarding the ownership structure of a given business entity.
