How Do You Increase The Par Value Of A Stock?
The par value of stock is the arbitrary value given when new stock is issued. The par value is also referred to as the “stated value,” which can be as low as 1 cent per share. While the price of the stock may increase over time as a result of retained earnings in a company, to increase the par value price, a company’s Board of Directors must reduce the number of original shares of common stock issued. Hold a Board of Directors meeting. Introduce a motion to have a reverse stock split. Vote and approve a one-for-two stock split. So, if there are 10,000 shares of common stock issued, this would result in 5,000 shares of stock. Calculate the new par value per share. Assume the original par value was 10 cents. The original value was 10,000 outstanding common shares times 10 cents per share, equaling $1,000. Since there is no change in the overall corporate common stock outstanding share value, you must have $1,000 in total common stock value after the split. Therefore, $1,000 divided by 5,
