Discount & Watered Stock
Share-issuance terms distinguish premiums and discounts to par from unpaid consideration, later assessments, and historical watered-stock claims.
Par value, no-par stock, legal capital, discounted issuance, and watered-stock terms explain statutory capital and shareholder payment exposure.
Par value and legal-capital rules determine how part of an equity contribution is assigned to statutory capital and when an issuance can create additional payment exposure. These rules are jurisdiction-specific and should not be used as shortcuts for company value, solvency, or shareholder returns.
| Branch | Use it for |
|---|---|
| Par Value, Legal Capital, and No-Par Stock | Nominal value, stated capital, dividend-source rules, and ordinary-share capital |
| Discounted, Premium, Assessable, and Watered Stock | Issue consideration, underpayment exposure, historical assessments, and overstated contribution backing |
Par value is a charter or share-term amount. Legal capital is a statutory concept. Share premium and APIC are contributed-equity accounts. Market capitalization uses market price and outstanding shares. These values can differ by orders of magnitude without contradiction.
Always identify the entity, jurisdiction, charter, class, issue date, consideration, board action, and governing statute. A rule applicable to original issuance may not apply in the same way to treasury-share disposition, a stock split, or secondary-market trading.
This section is educational and does not provide legal, securities, tax, accounting, transaction, financing, or investment advice.
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Share-issuance terms distinguish premiums and discounts to par from unpaid consideration, later assessments, and historical watered-stock claims.
Par-value and no-par shares use different statutory capital mechanics, while ordinary share capital identifies the relevant residual-equity class or legal definition.