If no-par stock is issued without a stated value then
A) the par value is automatically $1 per share.
B) the entire proceeds are considered to be legal capital.
C) there is no legal capital.
D) the corporation is automatically in violation of its state charter.

Question

Quizplus · Accepted Answer

Without a stated value, the entire proceeds from the sale of the no-par stock are considered to be legal capital. This means that the funds are not available for distribution as dividends or for other purposes until certain conditions are met, such as payment of creditors or the dissolution of the company. However, there is no automatic par value of $1 per share and the absence of a stated value does not automatically put the corporation in violation of its state charter.

If No-Par Stock Is Issued Without a Stated Value Then