Deferred Shares and No Par Shares

DEFERRED SHARES

Deferred Shares are normally issued to the founders of a company.

A deferred share is a share that does not have any right to the assets of the company which is undergoing bankruptcy until all common and preference shareholders are paid.

According to the Companies Act, no public company or subsidiary to the public company can issue deferred shares.

Deferred shares are issued to the founders at a small denomination to have control over the management by the virtue of their voting rights. Deferred shares are mostly used as a method of compensation to executives and founders of a company and as a means to induce an investor in a company.

NO PAR SHARES

Those shares which have no face value are called No Par Shares. The company issues No Par Shares which are divided into a number of specific shares without any specific denomination.

No par value stock (No Par Shares) prices are determined by the amount that investors are willing to pay for the No Par Shares in an open market. The benefit of no-par value shares is that companies can issue stock at a higher price in its future offering.

The value of no par shares can be measured by dividing the net worth of the company with a total no. of shares:

Value of no par share = Real Net Worth/Total Number of Shares