What are ordinary shares?

Ordinary shares, also known as common stock, are equity ownership units that a COMPANY issues to its founders. These shares have additional rights compared to preferred shares but are paid last in the case of liquidation and dividend distribution. Ordinary shares may be fully or partly paid.

What are preference shares?

Preference shares are usually shares that rank above other shares in terms of dividends or capital, but have restricted voting rights. They are almost always fixed-income securities; because of this, they do not usually participate in the company's success and are therefore typically a less risky form of investment than ordinary shares.

Preference shares vs ordinary shares: which is better?

There isn't a definitive answer as to whether preference shares are better than ordinary shares – it depends on the individual company and what their specific articles of association state. From a dividends perspective, preference shareholders usually receive payments before ordinary shareholders but this isn't always the case.

Startups Archives

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Category: Startups

January 14, 2022

Ordinary shares vs preference shares

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