Ordinary Shares

Ordinary shares or ordinary stock as they are commonly known are normally issued with a face value of either $0.10 each or $1 each.

It is common that some companies might reduce the face value from $1 to $0.50 or to $0.1. This is to make the ordinary shares more affordable to buyers or investors. The holders of these shares are the real owners of a company. They bear the rights and enjoy the profits ( or suffer the loses).

 

Ordinary Shares

Ordinary shares is the most common type of shares available in share market.

In a bad economic, the company might make little or no profits, the investors receive no dividends and possibly suffer capital loss in the stock value. Conversely, in good times, they receive high dividends and bonus shares. These shareholders are the one entitled to vote and decide on company policy. In liquidation, they divide among themselves the assets left over after all others including the preference shareholders have been paid. They stand to lose their investment if there are no assets left after the others have been paid off.  On the other hand, they stand to make a lot of money if the assets remaining are far in excess of their original investments

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In other words, ordinary shares has less priority compared to preference shares not only in asset liquidation but also dividend distribution. During dividend distribution, preference shares will have higher priority to receive higher dividends than ordinary shares. However, preference shares do not entitle the right for the shareholder to vote in general meetings or decide on the company policy.  No doubts, ordinary shares or ordinary stock are the most common type of shares available in stock market.