Types of stock
Stock typically takes the form of shares of
either common
stock or preferred stock. As a unit of ownership, common
stock typically carries voting rights that can be exercised in corporate
decisions. Preferred stock differs from common stock in that
it typically does not carry voting rights but is legally entitled to receive a
certain level of dividend payments before any dividends can be issued to
other shareholders.[3][4]
Convertible preferred stock is preferred stock that includes an option for the holder to convert the preferred
shares into a fixed number of common shares, usually anytime after a
predetermined date. Shares of such stock are called "convertible preferred
shares" (or "convertible preference shares" in the UK)
New equity issues may have specific legal clauses
attached that differentiate them from previous issues of the issuer. Some
shares of common stock may be issued without the typical voting rights, for
instance, or some shares may have special rights unique to them and issued only
to certain parties. Often, new issues that have not been registered with a
securities governing body may be restricted
from resale for certain periods of time.
Preferred stock may be hybrid by having the
qualities of bonds of fixed returns and common stock voting rights. They also
have preference in the payment of dividends over common stock and also have
been given preference at the time of liquidation over common stock. They have
other features of accumulation in dividend.
