WHAT IS COMMON STOCK
There are usually two different types of Stock that a Corporation can issue, Common Stock and Preferred Stock. Some states also allow a Corporation to also issue Undesignated Stock.
Common Stock is what Corporations normally issue to Shareholders. Preferred Stock, on the other hand is more like a bond or promissory note. Preferred Stock carries a fixed dividend percentage rate.
Common Stockholders receive a pro-rata share of the assets of the Corporation upon its dissolution if assets are available.
Common Stock can be voting, or non-voting.
Holders of voting Common Stock get to elect the Board of Directors of the Corporation, and thereby exercise control of the Corporation.
Holders of non-voting Common Stock do not get to elect the Board of Directors, but they still receive their pro-rata share of the Corporation's assets upon its dissolution if assets are available.
Common Stockholders may be eligible to receive dividends if Corporate profits allow.
Holders of Preferred Stock get paid dividends first. If there are profits left after paying the Preferred dividends, then dividends are paid to the Common Shareholders. That's why it's called Preferred Stock - dividends on it are paid first. There is a drawback, however.
As a trade-off for getting dividends first, Preferred Shareholders usually do not get to vote on matters affecting the Corporation. Preferred Stock is usually nonvoting.
NATIONWIDE BUSINESS SERVICES
All Business Documents, Inc. is not a lawyer or an accountant and provides only document filing and retrieval
services under your supervision.
All content and design copyright © 2003- All Business Documents, Inc. -
All Rights Reserved.