When forming a company, you always have to pick a "par value" for the stock. If you read my post on Delaware franchise tax, you know that par value can affect the amount of tax you pay in Delaware. For this reason alone, you want to keep it low. This is why par value in venture financed companies is typically set a t $.001 (sometimes it is $.01 or $.0001). Beyond that, what is par value and why does anybody care?

In ancient times (long before I started practicing law) par value was the price below which an issuer agreed not to sell stock. This limitation provided purchasers some assurance that future investors would not be offered better terms than they got. Of course, if par value is $.01 or, better yet, $.001, this is not much of an assurance. So this function of par value is no longer of any importance. However, it does live on in corporate law. For example, stock that is issued for less than par value is referred to as "watered stock" and is not likely to be "duly and validly issued fully paid and non-assessable," an opinion that lawyers are required to give in connection with many transactions.

So, why not just go to no par stock? The reason is that under Delaware law, the directors must set the "stated" value of no par stock, and this "stated value" serves the same purpose as par, but it put a burden and responsibility on Directors that they don’t have if you just pick a really low par value. And, if that is not reason enough, giving the legal opinion noted above for no par stock requires that the attorney ascertain the stated value – just one more thing to do.

All in all, if you read this post, you have spent more time on par value than you should. Pick a really low number and go with it.