Ordinary shares

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Ordinary Shares are any shares (of stock) that are not preferred shares and do not have a predetermined dividend amount. An ordinary share represents equity ownership in a company and gives the owner a vote in matters put before shareholders in proportion to their percentage ownership in the company.

Also known as "common stock".

The holders of ordinary shares are entitled to receive dividends if any are available after dividends on preferred shares are paid. They are also entitled to their share of the residual economic value of the company should the business unwind; however, they are last in line after bondholders and preferred shareholders for receiving business proceeds. As such, ordinary shareholders are considered unsecured creditors.

Ordinary shares include those traded privately as well as those traded on public stock exchanges. They have a stated "par value", but this value is more of a technicality, and will rarely be more than a few pennies per share. The true value of an ordinary share is based on the price obtained through market forces, the value of the underlying business and investor sentiment toward the company. [1]


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References[edit]

  1. Ordinary Shares. Investopedia.