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A concept from the old Companies Act which meant the value given to shares when they were created (i.e. the price for which they were first sold). Normally, the market price of a share quickly exceeded the par value as the company grew and made profits. The objective of the par value was to enable the "asset base" of the company to be clearly established (by multiplying the par value by the number of shares in issue and adding in any share premium account balance) at its inception so that no illegal erosion of the asset base could take place. The new Companies Act (71 of 2008) has replaced the "capital preservation" doctrine of the old Act with a doctrine of solvency and liquidity which means that it is no longer necessary to calculate a company's asset base and so the need for par value has been eliminated. For the same reason the concept of a "premium to par" is no longer relevant. The rule that dividends could only be paid from profits (i.e. distributable reserves) has obviously also fallen away and been replaced by the requirement for a solvency and liquidity test.