What is it?
Per share is a valuation method in corporate law and securities regulations that governs the distribution of company assets, profits, or liabilities based on ownership percentage.
per share
Corporate LawLegal glossary term
Quick answer
Per share usually means a calculation based on number of shares outstanding. In contracts, it matters because incorrect calculations can result in distributions disputes. Before signing, verify the exact share count and class definitions.
Definitions
What is per share?
Legal Definition
Per share indicates a calculation based on the number of shares outstanding in a corporation. It determines the value distributed to shareholders in dividends, during mergers, or in liquidation proceedings. The term requires specification of the class and series of shares, as different share classes may have varying rights.
Plain-English Translation
Per share works like dividing a pizza among friends based on how many slices each person gets. More shares mean larger portions when the company distributes value.
Contract relevance
Why per share matters in contracts
Ignoring per share calculations can result in shareholders receiving incorrect distributions during dividends or mergers, with minority shareholders bearing the greatest risk of underpayment.
Document context
Where per share appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Shareholder Agreement | Dividend provisions | Determines payout amounts to shareholders |
| Merger Agreement | Consideration section | Specifies acquisition price for each share |
| Corporate Charter | Capital structure section | Defines rights associated with each share class |
| SEC Form 10-K | Financial statements | Required disclosure of per share calculations |
| Stock Certificate | Face value | Indicates ownership percentage and rights |
| Buy-Sell Agreement | Valuation method | Determines price when shares change hands |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| $2.50 per share | $2.50 for each share owned | Verify total shares outstanding used in calculation |
| Per fully diluted share | Calculation including potential shares from options | Check if conversion terms are included |
| Per share on a fully diluted basis | Value after all convertible instruments are exercised | Confirm all potential shares are accounted for |
Red flags
Red flags to watch for
Wording examples
Clearer wording examples
Vague wording
Per share
Clearer wording
Per share of Class A Common Stock as of the record date
Vague wording
Per outstanding share
Clearer wording
Per fully diluted share of common stock as of [specific date]
Vague wording
Per share value
Clearer wording
$X per share of [specific class/series] stock based on [number] outstanding shares
Note: “clearer” means easier to read — not legally reviewed or guaranteed safe.
Pre-signature checklist
What to check before signing
1
Verify the exact share class referenced in the per share calculation
2
Confirm whether calculation uses authorized or outstanding shares
3
Check if per share amount includes or excludes preferred shares
4
Determine if the calculation includes potential shares from options/warrants
5
Verify the date as of which share count is determined
6
Check if any adjustments to the per share amount are specified
7
Confirm if per share amounts differ between share classes
8
Determine if calculation includes treasury shares
Party impact
How per share affects each party
| Party | What this party should check |
|---|---|
| Shareholders | Verify the per share calculation includes all shares owned and correct share class |
| Corporate officers | Ensure calculations properly account for all share classes and outstanding shares |
| Acquirers | Confirm per share offer reflects true value and includes all potential shares |
| Selling shareholders | Verify calculation uses correct share count and includes all applicable rights |
Comparison
per share vs similar terms
| Related term | Plain meaning | Main difference from per share |
|---|---|---|
| Market value | Current trading price of a share | Can fluctuate daily, unlike contractual per share amounts |
| Book value | Accounting value of equity per share | Based on historical cost, not market or contractual value |
| Par value | Nominal value assigned to shares for accounting | Often minimal and unrelated to actual market or contractual value |
| Enterprise value | Total company value including debt | Different from per share calculations which focus on equity only |
Missing or vague
If per share is missing or vague
Without clear definition of per share, shareholders may disagree on how distributions are calculated during dividend payments or mergers.
Different interpretations of which shares to include (common vs. preferred, outstanding vs. authorized) can lead to valuation disputes.
Ambiguity may result in litigation over whether convertible shares should be included in the calculation.
Vague terms can create uncertainty during bankruptcy proceedings when assets are distributed to shareholders.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Check how per share is defined and which share classes it includes |
| Capitalization | Verify authorized and outstanding share counts affecting per share calculations |
| Dividends | Examine per share amounts and calculation methods for distributions |
| M&A provisions | Review per share consideration in any merger or acquisition clauses |
| Liquidation | Inspect per share distribution order and priority in dissolution |
| Voting Rights | Confirm if per share determines voting power or just economic rights |
| Transfer Restrictions | Check if per share impacts share transfer limitations or rights |
Visual model
Understand per share fast
An explainer image has not been generated for this term yet.
01
Company board | Declares a $1 million dividend | Results in $2 per share distribution for shareholders with 500,000 shares outstanding
02
Acquirer | Offers $50 per share in takeover bid | Values target company at $5 billion based on 100 million shares outstanding
03
Bankruptcy court | Distributes remaining assets | Pays shareholders $0.75 per share after creditors receive priority claims
Document context
How per share shows up in legal documents
Why does it matter?
Ignoring per share calculations can result in shareholders receiving incorrect distributions during dividends or mergers, with minority shareholders bearing the greatest risk of underpayment.
When does it matter?
Per share calculations become critical when declaring dividends, during mergers and acquisitions, or in bankruptcy proceedings when distributing assets to shareholders.
Where is it usually seen?
Per share appears in shareholder agreements, SEC filings, corporate charters, and stock certificates, particularly in sections governing dividends, distributions, and buyout provisions.
Who is affected?
Shareholders benefit proportionally to their shareholdings when per share calculations are applied correctly, while corporate officers risk legal liability for miscalculations affecting shareholder distributions.
How does it work?
First, determine the total amount to be distributed among shareholders. Then, divide this amount by the total number of outstanding shares. Finally, multiply this per share value by each shareholder's share count to calculate their individual distribution.
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Wikipedia
Per share
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Where per share connects to real contract work
This layer links the term to nearby glossary entries, document use cases, and contract-risk guides so readers can move from definition to context without dead ends.
Glossary
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Source & disclosure
This page is an AI-assisted plain-English explanation based on LexPredict Legal Dictionary context and contract-review patterns. It is not legal advice. Meaning may vary by jurisdiction, industry, and exact clause wording.
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