Category: Money tips Release Date: 2006-05-11
Ordinary shares is the company's management and the distribution of profits and property rights on the enjoyment of ordinary shares, representing payment of claims to meet all requests and give priority to returns to shareholders the right to claim the right to request, with the right corporate profits and the remaining property claims. It constitutes the basis of company's capital, is a basic form of the stock, but also with the largest circulation, the most important stocks. Currently in Shanghai and Shenzhen Stock Exchange shares are ordinary shares. Holders of common stock according to the proportion of shares they hold to enjoy the following basic rights:
(1) The company's decision to participate. Common shareholders entitled to participate in general meeting of shareholders and has recommendatory powers, voting rights and the right to vote, you can also appoint a proxy to exercise his rights of shareholders.
(2) The profit distribution rights. Ordinary shareholders have the right to get the distribution of profits from the company dividends. Common stock dividend is not fixed, by the company profit status and its distribution policy decisions. Common stock shareholders must obtain a fixed dividend preference shareholders are entitled to dividends only after the allocation of rights.
(3) stock options. If the company needs to expand the issuance of common stock, the existing common stock shareholders are entitled to their equity ratio to below the market price of a particular priority in purchasing a certain number of newly issued shares, thereby maintaining its original ownership of enterprises ratio.
(4) the allocation of residual property rights. When a company bankruptcy or liquidation, if the company's property there is a surplus after the repayment of debt, according to the first part of its remaining preferred shareholders, common shareholders after the distribution of the order.
Preferred stock is the company to raise funds to give investors some of the priority shares. This priority is mainly manifested in two aspects: â‘?a fixed dividend preference shares do not fluctuate with the performance of the company good or bad, and can be ahead of ordinary shareholders to receive dividends; â‘?When a company goes bankrupt for liquidation of assets, the preferred shareholders company's remaining assets before common shareholders have a claim. However, preferred shares generally do not participate in the company's dividend distribution, shareholders have no voting rights, not possible to use the right to vote to participate in the company's operation and management. Therefore, the preferred and common stock compared, although the earnings and participation in decision-making power is limited, but with less risk.
Preferred Stock originated in Europe, the United Kingdom in the 16th century had been issued preferred stock. However, a few hundred years later, due to the level of productivity is not high, a company in order to manageable, only issued ordinary shares, preference shares issued rarely. Beginning of the 20th century, with economic development and technological progress, in order to raise badly needed huge funds, preferred shares will have a suitable soils. Company issued preferred stock primarily for the following considerations: â‘?settlement of corporate debt; â‘?to help companies tide over financial difficulties; â‘?want to increase the company's assets without affecting the common shareholders control.
The provisions of company law in some countries, preference shares can only be beefed up in the company or the liquidation of debt can be issued under special circumstances. So far, China has not yet been issued preferred stock.
