What is it?
This term functions as a fundamental measurement clause, controlling the distribution of rights, profit allocation, or debt obligations within corporate instruments and investment contracts.
per share
UCC / CommercialLegal glossary term
Quick answer
What does per share mean?
Per share usually means a value or obligation calculated for one unit of ownership in an entity. In contracts, it matters because it dictates how financial duties are distributed across your stock holdings. Before signing, check whether it refers to par value or market price.
Definitions
What is per share?
Legal Definition
The term per share describes a measurement of value, entitlement, or obligation relative to one unit of ownership in an entity. This phrase dictates how financial obligations are distributed across each single piece of stock or membership interest held by an owner. Practitioners often clarify whether this refers to the par value or the market price when drafting investment agreements.
Plain-English Translation
If your permission slip says 'per share,' it means you get one specific allowance for every single sheet of paper (share) you signed. It tells you exactly how much that one piece is worth.
Term context
How per share shows up in legal documents
Why does it matter?
Ignoring this metric can lead to miscalculation of damages or dividend payouts, resulting in a breach of contract claim against the issuing entity. The investor bears the primary risk if the per share value declines unexpectedly.
When does it matter?
This measurement is critical when an acquisition closes, establishing the agreed-upon price per share for transfer. It also triggers calculations upon the declaration of quarterly dividends.
Where is it usually seen?
You frequently see 'per share' specified in stock purchase agreements, offering memorandums, and shareholder resolutions filed with a Delaware court.
Who is affected?
A creditor uses it to determine collateral value; a franchisor uses it to set royalty payments per share of ownership; the shareholder risks receiving less than expected if the market price falls below the stated per share rate.
How does it work?
First, the total agreed-upon amount is established. Then, you divide that total by the total number of outstanding shares. The result yields the specific value assigned to one unit or 'per share.'
Contract relevance
Why per share matters in contracts
Ignoring this metric can lead to miscalculation of damages or dividend payouts, resulting in a breach of contract claim against the issuing entity. The investor bears the primary risk if the per share value declines unexpectedly.
Document context
Where per share appears in documents
| Document type | Section | Why it matters |
|---|---|---|
| Investment Purchase Agreement | Share Price Stipulation Clause | Determines the fixed cost paid for each unit of equity. |
| Stock Option Grant Letter | Exercise Price Section | Sets the predetermined price at which an owner can acquire shares. |
| Operating Agreement | Capital Contribution Schedule | Specifies the required financial contribution assigned to one membership interest. |
| Securities Offering Memorandum | Valuation Summary | Provides a standardized metric for investors evaluating the company's total worth. |
Contract language
Common contract wording
| Contract wording | Plain-English meaning | What to check |
|---|---|---|
| Payment of $10.00 per share | This means ten dollars for every single piece of stock you buy or sell. | Confirm if this is the agreed-upon purchase price. |
| Dividends distributed at 0.5 cents per share | This calculates the cash payout based on one unit of ownership. | Verify that this rate aligns with expected returns. |
| The obligation shall be $100 per share outstanding | This applies to every single share currently held by anyone in the company. | Ensure you know if this is your personal holding or total company shares. |
Red flags
Red flags to watch for
Per share, subject to market fluctuation
This creates ambiguity regarding the final payment amount; it's not fixed.
What to check: Demand a cap or floor price alongside this language.
Per share of par value only
This ignores what the stock is actually worth today, which can be misleading.
What to check: Check if the contract requires using the *market* price instead.
As determined per share by Board vote
The decision-making body retains unilateral power to change the unit cost later on.
What to check: Look for a defined process or timeline for that board determination.
Per share, net of all liabilities
This is complex; it means the value must account for debts first.
What to check: Ask specifically what liabilities are included in that calculation.
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 the basis (par vs. market) clearly defined?
2
Does it specify *which* shares (issued, outstanding, common)?
3
Are there any conditions that could change this 'per share' amount?
4
Is the currency explicitly stated for the measurement?
5
Does it clarify if this is a purchase price or an entitlement rate?
6
If variable, what formula governs the fluctuation?
Party impact
How per share affects each party
| Party | What this party should check |
|---|---|
| Investor/Shareholder | Must confirm the basis to ensure their investment matches expectations. |
| Seller (Company) | Needs to define this precisely to avoid disputes over the final sale price calculation. |
| Buyer (Purchaser) | Should verify that the 'per share' rate aligns with external market valuations. |
| Employee (Recipient of Options) | Must know if the option grant is based on par value or current fair market value. |
Comparison
per share vs similar terms
| Related term | Plain meaning | Main difference from per share |
|---|---|---|
| Total Share Price | This is the final amount paid for a block of shares, not just one. | Per share divides this total across all units. |
| Par Value | This is the nominal, often arbitrary, face value assigned to each stock unit. | Per share can be based on Par Value, but it might reference Market Price instead. |
| Dividend Rate | This specifically relates to income distribution, not necessarily purchase price or obligation. | While both are 'per share,' a dividend rate tracks payouts over time; the other terms often define upfront value. |
Missing or vague
If per share is missing or vague
If the term is undefined, courts will have to determine its meaning based on context, which creates massive risk for you.
For instance, if it just says 'payment per share,' does that mean the initial purchase price or the annual dividend?
Vagueness forces litigation because different parties might argue their interpretation of what constitutes a 'share' value.
This uncertainty can derail an entire transaction, especially in M&A deals where billions are at stake.
Document map
Document section map
| Contract section | What to inspect |
|---|---|
| Definitions | Look for how the term is capitalized and defined (e.g., defining 'Per Share Value'). |
| Purchase Price/Consideration | Inspect this section to see if 'per share' sets the fixed exchange rate. |
| Dividend Payments | Review this section to verify that the stated amount reflects a clear per share entitlement. |
| Option Grant Terms | Check here to confirm whether the exercise price is defined as 'per share.' |
| Shareholder Rights | Examine how voting power or capital contribution obligations are quantified per share. |
Visual model
Understand per share fast
An explainer image has not been generated for this term yet.
01
The landlord sets rent at $250 per share for a tenant who owns 10 units.
02
A borrower agrees to repay principal at $40 per share across all issued stock.
03
The company grants options priced at $15 per share, which is the benchmark for exercising rights.
Questions & answers
Common questions about per share
What does per share mean?
Per share usually means a value or obligation calculated for one unit of ownership in an entity. In contracts, it matters because it dictates how financial duties are distributed across your stock holdings. Before signing, check whether it refers to par value or market price.
What is per share in plain English?
If your permission slip says 'per share,' it means you get one specific allowance for every single sheet of paper (share) you signed. It tells you exactly how much that one piece is worth.
Why does per share matter in a contract?
Ignoring this metric can lead to miscalculation of damages or dividend payouts, resulting in a breach of contract claim against the issuing entity. The investor bears the primary risk if the per share value declines unexpectedly.
When does per share apply?
This measurement is critical when an acquisition closes, establishing the agreed-upon price per share for transfer. It also triggers calculations upon the declaration of quarterly dividends.
Where does per share appear in documents?
You frequently see 'per share' specified in stock purchase agreements, offering memorandums, and shareholder resolutions filed with a Delaware court.
Who is affected by per share?
A creditor uses it to determine collateral value; a franchisor uses it to set royalty payments per share of ownership; the shareholder risks receiving less than expected if the market price falls below the stated per share rate.
How does per share work?
First, the total agreed-upon amount is established. Then, you divide that total by the total number of outstanding shares. The result yields the specific value assigned to one unit or 'per share.'
What happens if per share is missing or vague?
If the term is undefined, courts will have to determine its meaning based on context, which creates massive risk for you. For instance, if it just says 'payment per share,' does that mean the initial purchase price or the annual dividend? Vagueness forces litigation because different parties might argue their interpretation of what constitutes a 'share' value. This uncertainty can derail an entire transaction, especially in M&A deals where billions are at stake.
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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.
9nodes
Glossaryacquisitionacquisition often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause aroun...Glossaryagreementagreement often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause around...Glossarycollateralcollateral often shapes similar contract language wording, negotiation leverage, and the plain-English meaning of the clause around...
BGRisk context hubGlossary meaning, document paths, and adjacent risk pages connected around this clause.
Use caseShareholders' AgreementLegal & Corporate: Your equity is worth only what the shareholders agreement lets you do with it.Use caseBill of Lading (BoL)Finance & Sales: Your cargo, your risk — unless the BoL says otherwise.Use caseSLA (Service Level Agreement)Project Management: 99.9% uptime sounds great — until you read what counts as downtime.RiskFinancial obligations clause riskPlain-English risk guide for financial obligations clause risk.RiskPenalty for breach clausePlain-English risk guide for penalty for breach clause.RiskFinancial liability in contractsPlain-English risk guide for financial liability in contracts.
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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