Why par value of shares matters to a first-time founder
Par value can affect stated share capital and restrictions on issuing shares below that amount. It does not tell founders or investors what a share is worth. Confusing it with valuation can make cap-table and funding discussions needlessly misleading.
Examples of par value of shares
A company has 1 million shares with a par value of ¥0.10, creating ¥100,000 of nominal share capital. An investor later pays ¥200 per share. The extra ¥199.90 per share is treated separately under applicable accounting rules.
Common misunderstanding
It is not the market price, fundraising price or ownership percentage. Par value is a legal and accounting convention, often set very low. Some jurisdictions permit no-par shares, and the rules for stated capital and share premium differ.
When to use it
Use it when incorporating, issuing shares or reading constitutional documents and the equity accounts. Follow local company law when setting or changing it. For economic decisions, focus on valuation, rights and dilution rather than the nominal amount alone.