What is one consequence of issuing par stock for less than par value?

Issuing par stock for less than its par value can result in personal liability for the directors of the corporation. This is because when shares are issued for less than their par value, it can be seen as a violation of corporate law, particularly in jurisdictions where issuing stock below par is prohibited. In such circumstances, directors may be held responsible for the loss incurred by shareholders and the corporation itself.

The rationale is that par value is a legal construct that represents the minimum price at which shares can legally be issued. By selling below this established value, the integrity of capital maintenance rules is threatened, and this can expose directors to claims from creditors or shareholders. Thus, if the corporation faces financial issues as a result, the directors could be personally liable for any losses attributed to their decision to issue shares below par value.

This explains why the correct response identifies directors' potential personal liability as a consequence of this action.