Different Classes of Company Shares

A listed company can issue different classes of shares that contain different rights and privileges, for example, rights to vote, rights to dividend payments, etc. Anyone can hold shares in a listed company, including employees who are also working in the company. As every share counts as one vote in the company, the more shares you acquire the more votes you have.

There are four common classes of shares available in the market: Ordinary shares, Convertible shares, Preference shares, Redeemable shares.

1) Ordinary shares: Ordinary shareholders are entitled to attend and vote at general meetings of the company. They are entitled to receive dividends, if any, after dividends on preference shares are paid.

2) Convertible shares: These are the shares that can be converted into a different class of shares at a predetermined price and date. Some preferred stocks are convertible shares that can be converted into common stock at the option of the holder.

3) Preference shares: Preference shareholders do not have voting rights in the meeting but they are entitled to receive dividends before the ordinary shareholders and the rate of dividend is fixed at the time of issue.

4) Redeemable shares: These shares are issued with an agreement that the company is entitled to buy them back from its members after a certain period or on a specific date. Shares of any class can be redeemable. For instance, an issue of redeemable preference share allows the company to buy it back at an agreed time and price.

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