Common Shares Par Value

Common shares' par value is a nominal figure that a company assigns to its shares when it is first incorporated. This value is usually set very low, such as $0.01 or $1 per share, and is largely arbitrary, bearing little relationship to the market value of the shares. 

The founders or board of directors typically determine the par value without the need for a formal valuation of the company. In some legal jurisdictions, a minimum par value is required, but most companies opt for a very low or even no par value to avoid complications related to issuing shares below par. 

Historically, par value served as a protective measure for creditors, ensuring that shares could not be sold below a certain price, but in modern practice, it fulfills little more than a legal formality.

It is determined through a much more rigorous process. Unlike the arbitrary nature of par value, the issuance price requires a detailed valuation of the company. This valuation considers the company’s financial health, market conditions, and growth prospects, among other factors. Investment bankers and underwriters play a key role in setting this price, often engaging in a process known as book building to gauge investor demand and determine the optimal price point. 

The issuance price is crucial as it affects the capital that the company can raise and the interest level among potential investors. After the shares are issued, their price will fluctuate based on market dynamics, but the initial issuance price is a critical factor in the company's fundraising efforts and market entry.

The issuance price is determined based on a detailed valuation, market conditions, investor demand, and company objectives, often involving investment bankers in the process.

While the par value has limited significance today, the issuance price is critical as it determines the initial capital raised and the entry point for investors.

I hope this helps. 

Best, 

365 Team