Question

In jurisdictions where par value shares are legally allowed, the only real significance of par value is

a.to enable the shares to be callable or convertible.
b.to require the corporation to pay dividends.
c.to establish the maximum responsibility of a shareholder in the event of insolvency. d.to establish the maximum price at which the shares can be sold

Answer 1

Par value in jurisdictions where it is legally allowed has the significance of establishing the maximum responsibility of a shareholder in the event of insolvency. Correct option is c)

Step-by-step explanation:

The only real significance of par value in jurisdictions where it is legally allowed is to establish the maximum responsibility of a shareholder in the event of insolvency. Par value represents the minimum price at which shares can be issued and the liability of shareholders in the case of company failure. It does not enable shares to be callable or convertible, require the corporation to pay dividends, or establish the maximum price at which shares can be sold.