If I buy penny stock which is below the par, am I liable for the diff. between par value and the issue price?
RE: Par value (stock) – An arbitrary dollar value that a company assigns to its shares. Par value has no economic significance. The legal significance of par value is, roughly, that if shares are issued below par value, the holders of those shares might be assessed the difference between par value and the issue price. Most stock certificates state that the shares are fully paid and non assessable to indicate that holders are not on the hook for additional contributions because the shares were issued at a price greater than par value. Companies usually assign a very low par value to common stock.
I am planning to buy some penny stock which is listed on Pink sheet, however there is something I am not very sure. According to above statement, if I buy 500,000 for example AA stock at $0.01 which is below the par, am I liable for the difference between par value and the issue price? Could you please help me with this question?
No, you are not liable for the par value. It is an accounting tool for the company. Nothing more. You are not liable for the issue price either. In fact you are not liable for anything other than paying the purchase price you contracted for.
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