What ordinary shares mean for you as an owner
As an owner of ordinary shares, you have the right to attend and vote at the general meeting and to share in any dividend. The voting rights make ordinary shares particularly important for anyone who wants to influence the company's decisions and long-term direction.
At the same time, ordinary shares mean that you share in both the upside and the risk. For dividends and in a liquidation, ordinary shares normally rank behind shares with special terms.
Rights and features of ordinary shares
Ordinary shares are characterised by a number of basic rights that define ownership.
- Voting rights at the general meeting
- The right to dividends if any are declared
- A share in the company's growth in value over time
- Ranking behind preference shares in a liquidation
- Rights set out in the articles of association
Once you know these features, it becomes easier to understand the role ordinary shares play in the company's ownership structure.
When ordinary shares are the central form of ownership
Worth bearing in mind
Ordinary shares are central in most companies, as they represent the regular ownership. In companies with only one share class, it is the ordinary shares that govern both voting rights and financial participation.
In companies with several share classes, ordinary shares often serve as the point of reference. Other shares, such as preference shares or shares with lower voting power, are often compared with the ordinary share to clarify the differences in rights.
Frequently asked questions
What is the difference between ordinary shares and preference shares?
Ordinary shares normally give voting rights and dividends without priority, whereas preference shares often have priority to dividends but limited voting rights.
Do ordinary shares always have the same voting power?
No, in companies with several classes of ordinary shares, the voting power can differ between, for example, A and B shares.
Do ordinary shares always pay a dividend?
No, dividends are decided by the general meeting and are not guaranteed.
Are ordinary shares most common in listed companies?
Yes, ordinary shares are the most common type of share in both listed and unlisted companies.
Do ordinary shares affect control of the company?
Yes, since voting rights follow the ordinary shares, they are decisive for who controls the company.