What is the implication of no par stock?

No par stock is a type of stock that does not have a nominal or par value assigned to it by the corporation's charter. This characteristic has significant implications for the issuance of the stock.

One key implication is that the board of directors has the flexibility to determine the price at which the no par stock will be issued, allowing them to set the amount based on what they consider adequate. This flexibility can be advantageous for the corporation as it can issue shares at any price its members deem appropriate, enhancing its ability to attract investment and respond to market conditions.

In contrast, stocks with a par value must be sold at or above that value, which restricts the board’s discretion. Therefore, the ability to issue no par stock at any price provides the company with greater strategic options and simplifies some aspects of capital raising.