Duhaime's Law Dictionary


Common Share Definition:

The basic share in a corporation.

The basic share in a for-profit corporation; a piece of ownership proportionate to the common share(s) held against the total issued.

Also known as ordinary shares or common stock.

These are bought from a corporation for a certain amount.

A common shareholder is generally expected to have voting rights (usually one vote per share) as to management, a proportionate "share" in profits (dividends), and, because they represent ownership, a share in any monies realized from the sale of assets if the company is ever wound up or otherwise dissolved.

These 3 basic rights are often tempered especially in large corporations who, to attract investment, will cut into common shareholder rights and also sell "special" or preferred shares, with these special or preferred shares taking priority as to dividends.

A multitude of permutations are allowed by jurisdictions which incorporate coroprations, and routinely utilized by corporations to attract and manage their investors. Thus, one will often find a whole slot of different shares, each with particular heirarchy in terms of dividends or voting rights, depending on what attracts a particular investor.

But when nothing else has been specified, the basic share is the common share, so called because it is the default share type.

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