I've looked everywhere, and everyone says that stocks can never sell below zero. I don't think that's true. For example, if a company is structured with unlimited liability, it should be possible for its stock to trade at negative prices.

Is it really impossible for stocks to trade at negative prices? If so, how are unlimited liability companies valued when they have negative shareholders' equity and are facing insolvency?

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    Stock holders aren't responsible for a company's liabilities. – NeutronStar Apr 23 '20 at 14:01
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    @NeutronStar I'm pretty sure that your statement is only applicable to companies with limited liability. With unlimited liability, aren't the stockholders be responsible for the company's liabilities? – Flux Apr 23 '20 at 14:02
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    @Flux Stocks are a highly regulated form of a bond. For a company to emit stocks it must have the appropriate form of organisation. That rules out that you ever buy a stock of an unlimited liability company. You can become a stakeholder in a unlimited company, but that involves usually a lot of legal procedures and is not easily tradet. – Daniel Apr 23 '20 at 15:08
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    Flux are you asking about stocks of that are traded on public stock exchanges? If so, then the answer is no, stocks cannot trade at negative prices. On US exchanges, a stock is delisted if it even gets below a price of $1 per share. Also, unlimited liability companies are not allowed to be traded on public stock exchanges as described by @DStanley in the linked question in his comment. – Ellie Kesselman Apr 25 '20 at 15:58
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    @Daniel: oil futures are not traded in stock exchanges. They are traded in futures exchanges. – Alex R Apr 25 '20 at 17:10

With an unlimited liability company, yes, in theory, its stock can trade at negative value that will still be capped by personal bankruptcy...in other words, if you own a portion of an unlimited liability company that is worth -$1 million, and your net worth is $250k, you'll just have to file personal bankruptcy and pay what can be recovered from your assets. The obvious difference with limited liability companies is that this firewall exists at the company level (rather than the individual) i.e. company files bankruptcy and your stockholdings get devalued to zero if liabilities exceed assets.

Having said all that, unlimited liability companies are quite rare if any on public exchanges. I believe most exchanges preclude them from being listed, but I can't find anything to support that belief. The last notable unlimited liability company I could find was American Express which converted to limited liability in 1965. This article states that it was the last publicly traded unlimited liability company in the United States.

A lot of the unlimited liability companies you hear of today are sole proprietors or partnerships. When you see a publicly traded corporate name/brand associated with the unlimited liability designation, that specific entity is most likely a subsidiary of some sort, probably created in that form for tax purposes, and surrounded by legal firewalls that prevent shareholder exposure to unlimited liability.


If a company has no assets and significant liabilities, it is bankrupt. With only a slight simplification, the company will be closed down. Any assets will be sold off (though in this hypothetical example, there are none). Any liabilities which cannot be paid off are simply cancelled.

Therefore, it makes no sense to claim a company is worth less than nothing, because bankruptcy would reduce that to nothing. Even if that wasn't true, stock holders aren't responsible for the company's liabilities.

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    Partnerships (without limited liability) and sole proprietorships have unlimited liability (owners are personally responsible for debts), but are not publicly traded (at least not in the US) – D Stanley Apr 23 '20 at 14:05
  • This is not applicable to companies with unlimited liability, whose stockholders are responsible for the company's liabilities, and therefore can be worth less than nothing. – Flux Apr 24 '20 at 4:24
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    Until 1965, American Express was a publicly traded unlimited liability company, which meant that its stockholders were responsible for the company's liabilities on a pro rata basis. It was in theory possible for the company to be worth less than nothing, and for its stock to trade at negative prices. – Flux Apr 24 '20 at 5:06
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    "If a company has no assets and significant liabilities, it is bankrupt." It is perfectly possible to have more liabilities than money, mortgage banks are famous for it. – Mast Apr 24 '20 at 8:26
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    @Mast: That's logical. Most businesses don't have much money, but do have other types of assets. Mortgage banks have mortgages. These do pay interest, which is money, but the mortgage banks will have debt of their own that need repaying. – MSalters Apr 24 '20 at 9:25

It is possible for some securities (or combinations of securities) to trade below zero. For example futures, and options spreads.

However most stock exchange systems limit the minimum price of a security to a penny. If there was significant demand, modifications could be made to allow stocks to trade at negative prices, but there does not appear to be demand for such a feature (most companies are limited liability, so the value could not go below zero).

  • Do exchange-traded option spreads exist? (not the options making up the option spread, but the option spread itself). – Flux May 6 '20 at 1:50
  • Yes, on ISE, CBOE, BOX, ARCA and others. The sometimes call it the complex order book (COB) and some offer dedicated market data feeds just for the complex book. – xirt May 6 '20 at 16:52

A share may not be bought, sold or traded for less than the par value. Simply stated, if the par value of a share is $1.00, then it cannot be issued to an investor for less than a dollar, paid for in funds or services.

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    Are you sure that shares cannot be traded for less than their par value? Isn't par value only relevant when the company is issuing new shares? I don't see why shares cannot trade after that at a price below par value. For example, if a company's shares have par value $10, nothing is going to stop me from selling a share to a willing buyer at $1. After all, it's a voluntary transaction between two parties. – Flux Apr 25 '20 at 8:06
  • The par value restriction only applies to the company issuing its own stock. – noslenkwah Jun 7 at 15:31

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