Ordinary Shares

AAA

DEFINITION of 'Ordinary Shares'

Any shares that are not preferred shares and do not have any predetermined dividend amounts. An ordinary share represents equity ownership in a company and entitles the owner to a vote in matters put before shareholders in proportion to their percentage ownership in the company.

Ordinary shareholders are entitled to receive dividends if any are available after dividends on preferred shares are paid. They are also entitled to their share of the residual economic value of the company should the business unwind; however, they are last in line after bondholders and preferred shareholders for receiving business proceeds. As such, ordinary shareholders are considered unsecured creditors.

Also known as "common stock".

INVESTOPEDIA EXPLAINS 'Ordinary Shares'

Ordinary shares include those traded privately as well as shares that trade on the various public stock exchanges. Ordinary shares have a stated "par value", but this value is more of a technicality, and will rarely be more than a few pennies per share. The true value of an ordinary share is based on the price obtained through market forces, the value of the underlying business and investor sentiment toward the company.

RELATED TERMS
  1. Contingent Shares

    Shares of company stock that are issued only if certain conditions ...
  2. Common Stock

    A security that represents ownership in a corporation. Holders ...
  3. Golden Share

    A type of share that gives its shareholder veto power over changes ...
  4. Preferred Stock

    A class of ownership in a corporation that has a higher claim ...
  5. Dividend

    1. A distribution of a portion of a company's earnings, decided ...
  6. Marketable Security

    Any equity or debt instrument that it readily salable and can ...
Related Articles
  1. Stock Basics Tutorial
    Investing Basics

    Stock Basics Tutorial

  2. Knowing Your Rights As A Shareholder
    Investing Basics

    Knowing Your Rights As A Shareholder

  3. The Key To Apple's Scale? Half A Billion ...
    Stock Analysis

    The Key To Apple's Scale? Half A Billion ...

  4. Alibaba's Goal: Supplant eBay, Amazon ...
    Stock Analysis

    Alibaba's Goal: Supplant eBay, Amazon ...

comments powered by Disqus
Hot Definitions
  1. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  2. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  3. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  4. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  5. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
  6. Limit-On-Open Order - LOO

    A type of limit order to buy or sell shares at the market open if the market price meets the limit condition. This type of ...
Trading Center