What is it?
This term functions as a quantitative measure within contract clauses and financial instruments, governing the distribution of rights or obligations based on fractional ownership.
per share
SecuritiesLegal glossary term
Quick answer
Per share usually means a metric tied to one single unit of ownership or value. In contracts, it matters because it dictates how profits, voting rights, or costs are distributed among stakeholders. Before signing, check whether the calculation specifies common or preferred stock.
Definitions
What is per share?
Legal Definition
Per share describes a quantifiable unit of ownership, value, or distribution tied to one single stake in an entity. This metric dictates how benefits, obligations, or costs are divided among those who hold shares, making it vital for calculating proportionate rights. The most critical distinction involves whether the calculation is based on common stock or preferred stock.
Plain-English Translation
It's like a permission slip: if you have one 'per share,' you get one specific right listed on that paper. It tells everyone exactly how much they are entitled to.
Contract relevance
Why per share matters in contracts
Misapplying this unit can lead directly to an improper calculation of damages owed, resulting in a breach of contract claim against the obligated party. The investor bears the primary risk if the valuation is wrong.
Document context
Where per share appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Stock Purchase Agreement | Article III: Consideration | Defines the price paid per share for equity transfer. |
| Securities Offering Memorandum | Section 4.1 Valuation | Establishes the baseline market value of one share. |
| Shareholder Agreement | Exhibit A, Schedule 1 | Details voting rights allocated on a per share basis. |
| Settlement Stipulation | Paragraph 7(b) | Quantifies damages awarded to each shareholder individually. |
| Bylaws Document | Article II: Capital Stock | Specifies the authorized number of shares and their associated value. |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| A dividend of $0.50 per share | This means every one unit of stock receives fifty cents in profit distribution. | Ensure you know which class of share this applies to. |
| Voting power calculated at 1 vote per share | This confirms your influence scales directly with the number of shares you hold. | Verify if there are any weighted voting adjustments. |
| The obligation is $10,000 per share outstanding | This ties a liability amount to every piece of stock currently issued by the company. | Confirm 'outstanding' means fully paid and not reserved. |
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
Is it common stock or preferred stock?
2
What is the exact reference date for the 'per share' calculation?
3
Does the definition account for options/warrants (fully diluted)?
4
Are there any conditions precedent that change the per share rate?
5
Is the base currency specified for the dollar amount?
6
If multiple classes exist, does it specify which class is being measured?
Party impact
How per share affects each party
| Party | What this party should check |
|---|---|
| Shareholder | Check if your specific stock class receives preferential treatment in the 'per share' calculation. |
| Investor (Buyer) | Confirm that the per share price reflects current market realities and anticipated growth. |
| Company (Seller/Issuer) | Ensure the definition accurately reflects liabilities owed to all existing shareholders. |
| Creditor | Verify that security interests are attached to shares calculated on a specific 'per share' basis. |
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
If the term lacks specificity, a dispute arises over *what* is being measured. Ambiguity surrounding 'per share' can lead to arguments about whether dividends are based on common or preferred stock first.
Furthermore, if the date isn't fixed—say, 'as of closing' without defining closing—a fight erupts when market prices shift between signing and funding.
The vagueness forces parties into litigation to determine which accounting method the other party implicitly assumed.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions Section | Look for a precise definition that specifies stock class (Common/Preferred). |
| Payment or Consideration Clauses | Inspect this to see if the obligation is stated as '$X per share' or '$Y total amount'. |
| Dividend Distribution Article | This section must define the 'per share' payout rate and its priority. |
| Voting Rights Section | Confirm that voting power is tied directly to the calculated per share metric. |
Visual model
Understand per share fast
An explainer image has not been generated for this term yet.
01
The franchisor commits $50 per share to marketing costs; the borrower pays 1.2% interest per share on the loan principal; the shareholder receives $3.50 dividend per share after year-end closing.
Document context
How per share shows up in legal documents
Why does it matter?
Misapplying this unit can lead directly to an improper calculation of damages owed, resulting in a breach of contract claim against the obligated party. The investor bears the primary risk if the valuation is wrong.
When does it matter?
The term activates when dividends are declared, debt is paid down, or voting rights need to be exercised following a corporate action, like a merger announcement.
Where is it usually seen?
You see 'per share' constantly in stock purchase agreements, options contracts under UCC § 2-318, and on government forms detailing equity ownership.
Who is affected?
A creditor uses it when calculating collateral interest owed per share of pledged stock; an indemnitor uses it to define their liability contribution per share of loss suffered; a shareholder relies on it for dividend entitlement.
How does it work?
First, the total value or obligation is established. Then, that total amount is divided by the precise number of shares outstanding. Finally, the resulting quotient represents the monetary value attributed to one single unit—the 'per share' rate.
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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.
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Glossarycorporate actioncorporate action often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause...Glossaryliabilityliability often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause around...Glossarypreferred stockpreferred stock often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause a...
BGRisk context hubGlossary meaning, document paths, and adjacent risk pages connected around this clause.
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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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