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Common stock's par value is an insignificant amount specified in the corporate charter.
What is common stock?
Common stockholders are the owners of the rights to participate in the election of the board of directors, vote on significant corporate policies, and claim a portion of the company's profits.
Meaning of par value:
The value the company assigns the stock in its articles of incorporation is arbitrary and has no bearing on the stock's market price. The par value of a common stock has no significance to investors. Stock sales in excess of par value are noted on the balance sheet of the company.
Meaning of corporate charter:
The founding members of a corporation must submit a legal document to the secretary or registrar of the state where they intend to conduct business, which is known as a corporate charter or articles of incorporation. Only after the charter is approved does the company formally become a corporate entity.
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