CandleFocus Glossary Editor
Ordinary shares of stock represent a proportional ownership stake in a company. When entities own these shares of stock, they are referred to as shareholders. As partial owners of the company, shareholders are entitled to a pro-rated portion of the company’s earnings and total assets. As partial owners, holders of ordinary shares of stock have compounding rights to all assets, claims, and governance of the business.
When it comes to dividends and other benefits, holders of ordinary shares of stock may or may not receive dividends based on a company’s performance. Company owners have the authority to decide when and if shareholders receive payouts from the company, based on a company’s performance and the company's internal policies. Typically, the type of shares associated with dividends is called “preferred shares”, which comes with a promise of guaranteed dividends at a set percentage.
As business owners, stockholders can generally vote on major changes in a company's governance and structure. Ordinary shares usually carry one vote per share, though some preferred shares may be created with less representation and voting rights. Stockholders may hold non-public information that, if revealed, could affect the stock price of the company. Consequently, stockholders may sometimes be asked to sign non-disclosure agreements that limit the ability to publicly discuss such material information.
To sum up, ordinary shares of stock represent a proportional ownership stake in a company. These stakes come with voting rights and the potential for company dividends, should owners decide to issue them. Owners of ordinary shares typically have compounding rights to the assets of the business, as well as general voting rights. Though dividends are not guaranteed, preferred shares of stock promise a set percentage of dividends. Last, stockholders have the responsibility to keep certain information private to uphold the stock price of the company.
When it comes to dividends and other benefits, holders of ordinary shares of stock may or may not receive dividends based on a company’s performance. Company owners have the authority to decide when and if shareholders receive payouts from the company, based on a company’s performance and the company's internal policies. Typically, the type of shares associated with dividends is called “preferred shares”, which comes with a promise of guaranteed dividends at a set percentage.
As business owners, stockholders can generally vote on major changes in a company's governance and structure. Ordinary shares usually carry one vote per share, though some preferred shares may be created with less representation and voting rights. Stockholders may hold non-public information that, if revealed, could affect the stock price of the company. Consequently, stockholders may sometimes be asked to sign non-disclosure agreements that limit the ability to publicly discuss such material information.
To sum up, ordinary shares of stock represent a proportional ownership stake in a company. These stakes come with voting rights and the potential for company dividends, should owners decide to issue them. Owners of ordinary shares typically have compounding rights to the assets of the business, as well as general voting rights. Though dividends are not guaranteed, preferred shares of stock promise a set percentage of dividends. Last, stockholders have the responsibility to keep certain information private to uphold the stock price of the company.