In jurisdictions where par value shares are legally allowed, the only real significance of par value is
A) to enable the shares to be callable or convertible.
B) to require the corporation to pay dividends.
C) to establish the maximum responsibility of a shareholder in the event of insolvency.
D) to establish the maximum price at which the shares can be sold.

Question

Quizplus · Accepted Answer

In jurisdictions where par value shares are legally allowed, the par value establishes the minimum amount that shareholders must pay for each share. This means that in the event of insolvency, a shareholder's maximum responsibility to contribute to the company's debts is limited to the par value of their shares. The other options listed (A, B, and D) are not the primary significance of par value shares.

In Jurisdictions Where Par Value Shares Are Legally Allowed, the Only