Common Shares

Financial Dictionary -> Investing -> Common Shares

Common shares of stock, also referred to as voting shares, typically gives the owner voting rights that may be exercised in the company's decisions in which they are held. Most of the time, a shareholder gets one vote per share of stock owned to elect the directors of the company. Common shares may or may not offer this voting feature depending on what the company has predetermined. This is different from preferred stock which usually doesn't carry voting rights but the owner is legally entitled to receive a certain level of dividends.

If a company is liquidated, holders of common shares have rights to the company's assets. However, this is only after holders of preferred stock and other debtors have been satisfied. Therefore, we would deduce that a 'share' of stock actually represents part ownership in a corporation.

Shareholders of common stock often have the right to purchase more stock. Of course, there is no obligation to do this, but they have what is known as preemptive rights. Preemptive rights give the common stock shareholder the opportunity to buy as many shares of stock as it takes to maintain the portion of his ownership in the corporation.

The history of the offering of stock dates back many, many centuries - the Dutch East India Company was the first company to issue stock in 1606. Today we have stock exchanges, which are organizations that provide a place to trade shares of stocks from a wide range of companies. Investors, or buyers of stock, are represented by stock brokers at stock exchanges.

If you're interested in investing in common stock, you may do so by contacting a stock broker or by trading online yourself. Before becoming an investor, be sure to research the company to make sure it's a good investment or talk to your stock broker for advice.