Non-Preferential Shares
Content
Definition
Non-Preferential Shares are shares that do not offer preferential rights in terms of dividends or liquidation proceeds.
Usage and Context
Non-preferential shares, often referred to as ordinary or common shares, provide shareholders with voting rights but do not guarantee any specific dividend or priority in the event of liquidation.
Frequently asked questions
- What is nonparticipating stock? Nonparticipating stock refers to shares that do not provide the holder with additional dividends beyond the fixed amount or participation in additional profits of the company.
- What is a noncumulative preference share? A noncumulative preference share is a type of preferred stock where missed dividend payments do not accumulate and are not paid out in the future if the company skips payments.
- What is the difference between preferential and ordinary shares? Preferential shares offer fixed dividends and priority over ordinary shares in the event of liquidation, while ordinary shares provide voting rights and potential for variable dividends without priority.
Benefits
Non-preferential shares give shareholders voting rights and the potential for capital appreciation through stock price increases.
Conclusion
Non-preferential shares, or ordinary shares, offer shareholders voting rights and potential capital gains but do not provide guaranteed dividends or priority in liquidation, making them a fundamental part of a company`s equity structure.
