TLDR:
Par value is the face value of a share as stated in a company’s articles of incorporation, typically a very small amount (e.g., $0.0001 per share) with little practical significance but important for legal purposes.
Par Value in Modern Practice
Although par value has little economic significance today, it remains legally important for several reasons. In some states, a company cannot pay dividends or make other shareholder distributions if it would impair its ‘stated capital’ (par value times issued shares). Delaware allows companies to set par value as low as $0.0001 per share, minimizing this constraint. Setting par value extremely low also reduces the stamp duties and incorporation taxes calculated on par value in some jurisdictions.
For startup lawyers and founders, par value occasionally matters in accounting entries (paid-in capital is split between par value amount and additional paid-in capital) and in certain anti-dilution calculations. When issuing stock below par value — which occurs when options are exercised below the par value threshold — California and some other states require additional corporate procedures. Most modern Delaware incorporations use $0.0001 par value to effectively minimize par value’s practical impact on corporate operations.