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Ontario|Business LawCorporations 222 Common and preferred or special shares If you hold common shares, you are a part-owner in the corporation. Common shareholders, however, risk losing all or part of their investment if the company fails because the business' creditors and preferred shareholders are ahead of the common shareholders in claiming the assets of the company.
In both private and publicly traded companies, there may also be different classes of common shares. For example, some may have voting rights and no dividends and others may have no voting rights but do pay a dividend.
As noted, preferred shareholders have greater rights to the company's ownership above those of the common shareholders but below creditors. In most corporations, preferred shareholders receive a higher dividend than common shareholders. As a result, preferred shares are often valued higher than common shares. Most preferred shares do not carry voting privileges.
For more information about corporations, refer to other sections of Legal Line .
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