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. How To Invest In The Nikkei 225
    Mutual Funds & ETFs

    How To Invest In The Nikkei 225

  4. A Guide To Japan’s Nikkei 225 Index
    Investing Basics

    A Guide To Japan’s Nikkei 225 Index

comments powered by Disqus
Hot Definitions
  1. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  2. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  3. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  4. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  5. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
  6. Days Payable Outstanding - DPO

    A company's average payable period. Calculated as: ending accounts payable / (cost of sales/number of days).
Trading Center