No Par value Stock in Utah

[Bwlf]

I'm searching the Utah Code and the Division of Corporations site and I can't find anything about if no par value stock is allowed in Utah.
Can anyone direct me to any relevant statute or guidance on the legality of no par value stock in Utah?

Thanks!

 

[tranquility]

Why do you care? Since par value has almost no meaning, what practical significance does the question have?

 

[quincy]

I'm searching the Utah Code and the Division of Corporations site and I can't find anything about if no par value stock is allowed in Utah.
Can anyone direct me to any relevant statute or guidance on the legality of no par value stock in Utah?

Thanks!

Are you studying for an exam, Bwlf? Your questions seem to indicate that.

In case this is homework, instead of providing a link I will direct you to Title 16 of the Utah Code.

 

[Bwlf]

Are you studying for an exam, Bwlf? Your questions seem to indicate that.

In case this is homework, instead of providing a link I will direct you to Title 16 of the Utah Code.

I'm not in school. Don't intend to ever be a lawyer. I'm on this forum for help understanding a few issues.

Before asking I had already searched 16-10a-202. Articles of incorporation may state
(iii) a par value for authorized shares or classes of shares;

I know some states specifically prohibit no par value stock. I'm trying to understand if Utah is one of them. This is important to the observance of corporate formalities.

 

[FlyingRon]

You need to actually READ the entire sentence in the regulation. The part you are quoting says

Section (1) states that what the articles of incorporation SHALL (this means what is REQUIRED) to state.

Section (2), what you're reading, states what the articles of incorporation MAY (allowed to, but not required) state

Issuance of shares is pretty much covered in section 601. They are required to have stated things like voting rights and dissouliton rights but I see nothing requiring declaraing a par value.

As alluded, there are only very specific times when a par value ever means anything. Mostly it's an accounting thing at the time of issuance. It's usually however, just a de minimis valuation. Some states vary the filing fee based on the number and par value of shares. Utah does not.



But to answer the question, Utah allows creating of a corporation without stating a par value on the stock.
In fact, when you create the corporation online, you declare the type and number of shares and there's not even a place to enter PAR value.

 

[Bwlf]

You need to actually READ the entire sentence in the regulation. The part you are quoting says

Section (1) states that what the articles of incorporation SHALL (this means what is REQUIRED) to state.

Section (2), what you're reading, states what the articles of incorporation MAY (allowed to, but not required) state

Issuance of shares is pretty much covered in section 601. They are required to have stated things like voting rights and dissouliton rights but I see nothing requiring declaraing a par value.

As alluded, there are only very specific times when a par value ever means anything. Mostly it's an accounting thing at the time of issuance. It's usually however, just a de minimis valuation. Some states vary the filing fee based on the number and par value of shares. Utah does not.


But to answer the question, Utah allows creating of a corporation without stating a par value on the stock.
In fact, when you create the corporation online, you declare the type and number of shares and there's not even a place to enter PAR value.

Thanks for the reply.

So it seems that nowhere in Utah statutes does it prohibit a corporation from declaring it's stock to have no par value in the Articles of Incorporation as follows:
"The corporation is authorized to issue a single class of <insert number of shares> of Common Stock, no par value, which shall exercise all voting rights and shall be entitled to receive the net assets of the corporation upon dissolution."

 

[quincy]

Thanks for the reply.

So it seems that nowhere in Utah statutes does it prohibit a corporation from declaring it's stock to have no par value in the Articles of Incorporation as follows:
"The corporation is authorized to issue a single class of <insert number of shares> of Common Stock, no par value, which shall exercise all voting rights and shall be entitled to receive the net assets of the corporation upon dissolution."

Well, that is not entirely true. It depends on the type of corporation.

 

[Bwlf]

Well, that is not entirely true. It depends on the type of corporation.

Can you clarify your answer?
How does the type of corporation effect this?
My understanding of corporate types includes:
for profit/non profit (I'm only interested in applicability of for profit)
IRS classification c-corp vs s-corp (I believe this would have nothing to do with how the state would look at the corporation)

Thanks!

 

[Bwlf]

In your statement above, you say that Utah statutes do not prohibit a corporation from declaring its stock to have no par value - but, for one example, pure captive or sponsored captive insurance companies incorporated as stock insurers cannot issue stock at less than par value.

This probably doesn't apply to you or your concerns )), but there are exceptions to your statement that I thought I would point out.

Thanks for clearing that up.