Ordinary share

An ordinary share is a share that can be traded on the market and that represents a proportional part of the capital stock of a company. This title or financial value entitles its holder to be the owner of the company in the part that corresponds to him.

The common share, unlike other financial products, does not have an expiration date (perpetual), as long as the company continues with its activity.

Characteristics of ordinary shares

The characteristics of ordinary shares can be summarized as follows:

1. Right to profit sharing: The ordinary shareholder has the right to receive dividends or benefits distributed by the company without a maximum limit.. Now, you will be able to benefit from this distribution of benefits according to the company's policy, establishing when the share has to be bought and the time it must be held, otherwise, the person who speculates would also be rewarded and not the true investor, who is who trusts the company. Therefore, the company will establish a series of rules to access the distribution of the dividend. In turn, it will be the Board of directors which must set the dividend payment policy before the shares are issued.
2. Right to claim assets in liquidation: You have the right to claim part of the value of the business in the event of bankruptcy. Regarding the order of hierarchy of collection rights of the ordinary shareholder in case the company declares bankruptcy, it will not be able to claim on its assets until the holders of bonds or privileged actions have been satisfied by the remaining capital, it may even be the case that the ordinary shareholder loses everything, his liability being limited to the investment made.
3. Right to vote: It is important to note that the ordinary shareholder is usually the only one with the right to vote at shareholders' meetings to elect the Board of Directors.
4. Property rights: It grants the ordinary shareholder the right to maintain their share of capital in the company, and in the event that capital increases are carried out, they will have the right to participate in it according to their percentage in the company.
5. Limited liability: Despite being the owner of the business, your liability to the business in bankruptcy is limited.