How to Find Total Shares Excess Par Value?
The excess par value of shares refers to the amount that investors pay above the stated par value of each share when purchasing it. It provides a means for companies to raise additional capital and increase the value of their stock. To calculate the total shares’ excess par value, one needs to follow a simple formula using the number of shares issued and the excess value per share.
The Formula: Number of Shares x Excess Value per Share = Total Shares Excess Par Value
To find the total shares’ excess par value, you need to multiply the number of shares issued by the excess value per share. This calculation allows companies to determine the additional capital they have raised through issuing shares above their par value. Let’s look at an example to understand the process better.
Suppose a company issues 10,000 shares at a par value of $10 each. Additionally, each share has an excess value of $5. To find the total shares’ excess par value, use the formula: 10,000 shares x $5 excess value per share = $50,000. Therefore, the company has raised a total excess par value of $50,000.
Frequently Asked Questions (FAQs)
Q1: What is the par value of a share?
The par value of a share represents the nominal value assigned to each share by a company in its corporate charter.
Q2: Can the excess par value be different for different shareholders?
No, the excess par value remains the same for all shareholders who purchase shares at a particular offering price.
Q3: Why do companies issue shares with an excess par value?
Companies issue shares with an excess par value to raise additional capital, enhance the perceived value of their stock, and potentially increase investor interest.
Q4: How is the excess value per share determined?
The excess value per share is determined by calculating the difference between the offering price and the par value of each share.
Q5: Is the excess par value the same as market value?
No, the excess par value is not the same as market value. The excess par value is determined by the company, while market value is influenced by various factors such as supply and demand.
Q6: Are there any legal restrictions on the excess par value of shares?
Different jurisdictions may have regulations and limitations regarding the maximum excess par value or the calculation method for determining it.
Q7: Can the excess par value change over time?
The excess par value can change over time if the company decides to issue additional shares at a different excess value per share.
Q8: Is the excess par value refundable to investors?
No, the excess par value is not refundable to investors. It represents the additional value paid by shareholders to acquire shares.
Q9: Does excess par value affect dividends?
Excess par value does not directly affect dividends. Dividends are typically distributed based on the number of shares held, irrespective of their par value and excess value.
Q10: How is the excess par value recorded in a company’s financial statements?
The excess par value is recorded as part of the paid-in capital or additional paid-in capital section in a company’s balance sheet.
Q11: Can the excess par value change the voting rights of shareholders?
The excess par value does not impact the voting rights of shareholders. Voting rights are based on the number of shares held, regardless of their par value or excess value.
Q12: What happens if a company issues shares below their par value?
If a company issues shares below their par value, it is considered a discount and does not contribute to the excess par value calculation. However, issuing shares below par value may have legal implications and require consent from shareholders or regulatory authorities.
By following the formula mentioned above and understanding the concept of excess par value, companies can accurately calculate the additional capital raised through issuing shares beyond their nominal value. It is essential to consult legal and financial professionals to ensure compliance with any regulations related to excess par value and share issuances in your jurisdiction.