2. EQUITY OR ORDINARY SHARES
• Holders of this type of shares are considered as the real
owners of the company. As such, they have full control
and voting rights at annual general meetings.
• Ordinary shareholders are the last to be paid if the
company is wound up.
1. These shares have voting rights.
2. It doesn’t offer a fixed rate of return.
3. Ordinary shareholders receive their dividend after
preference shareholders.
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3. DEFERRED SHARE
• A deferred share is a share that does not have any rights
to the assets of a company undergoing bankruptcy until
all common and preferred shareholders are paid.
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4. Preference Shares
Preference shares as those shares which carry preferential rights
as the payment of dividend at a fixed rate and as to repayment of
capital in case of winding up of the company.
• Holders of preference shares do not have voting rights at annual
general meetings.
• Preference shareholders receive their dividend before ordinary
shareholders
• Preference shareholders receive a fixed rate dividend every year.
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5. Types of Preference shares
(i). Convertible preference shares:
Convertible preference shares are those shares which can
be converted into equity shares within a certain period.
(ii). Non-convertible Preference Shares;
Preference shares, which are not convertible into equity
shares, are called non-convertible preference shares.
(iii).Participating Preference Shares;
Participating Preference shareholders have the right to
receive any remaining profit which is left after payment of
dividend to the equity shareholders.
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6. (iv). Non-participating Preference Shares;
Preference shares, which have no right to participate on the
surplus profit or in any surplus on liquidation of the company, are
called non-participating preference shares.
(v).Redeemable Preference Shares;
Redeemable Preference shares are those shares which have to
be repaid by the company after a fixed period of time from the
date of issue of such shares.
(vi). Non-redeemable Preference Shares
Those preference shares, which can not be redeemed during the
life time of the company, are known as non-redeemable
preference shares. The amount of such shares is paid at the time
of liquidation of the company.
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7. (vii).Cumulative Preference Shares;
Cumulative preference shares give the right to the
preference shareholders to receive arrears of dividend
which were not paid in previous years due to company
making loss.
(viii).Non- cumulative Preference shares;
Non- cumulative Preference shareholders do not have
right like Cumulative preference shareholders and
therefore they cannot demand any arrears of dividend
which were not paid during previous years by the
company. 7
8. Shareholders have the right to
• Elect representatives to the board of directors at the annual
shareholder meeting
• Recall board members who are not doing their job .
• Recommend amendments to their co-op documents or propose policy
to the Board
• Vote on proposed amendments to the By-Laws and proprietary lease
• Meet with the board of Directors
• Call special meetings in accordance with the procedure outlined in the
By-Laws (10% of the shareholders are needed to call a special
meeting)
• Request shareholder education/training programs
• Run for the board of Directors 8
9. CONT,
• Sell their shares
• Receive equity and applicable profit upon the sale of
shares
• right to transfer ownership (often in restricted
circumstances)
• receive company reports and announcements
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10. Shareholders have the responsibility to . . .
• Attend the annual meeting, and other important
shareholder meetings
• Vote competent representatives to the board of Directors
• Take a turn serving on the Board, if elected
• Know what is in the By-Laws and proprietary lease
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