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 Shareholder

    An individual, business or institution that holds common shares ...
  3. Closely Held Stock

    A company whose common shares are owned by one individual owner ...
  4. Common Stock

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

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

    A class of ownership in a corporation that has a higher claim ...
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. When To Buy Strongly Performing Stocks
    Chart Advisor

    When To Buy Strongly Performing Stocks

  4. Home Depot's Profitability: The Unvarnished ...
    Stock Analysis

    Home Depot's Profitability: The Unvarnished ...

comments powered by Disqus
Hot Definitions
  1. Halloween Massacre

    Canada's decision to tax all income trusts domiciled in Canada. In October 2006, Canada's minister of finance, Jim Flaherty, ...
  2. Zombies

    Companies that continue to operate even though they are insolvent or near bankruptcy. Zombies often become casualties to ...
  3. Witching Hour

    The last hour of stock trading between 3pm (when the bond market closes) and 4pm EST. Witching hour is typically controlled ...
  4. October Effect

    The theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological ...
  5. Repurchase Agreement - Repo

    A form of short-term borrowing for dealers in government securities.
  6. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
Trading Center