ABSTRACT
This term is used to refer to the shares which are not given any special rights. If the company issues shares which all enjoy uniform rights, they will be ordinary shares. But, should the company confer special rights on some of its issued shares, then the shares not enjoying those rights will be classed as the ordinary shares. The usual position is that the ordinary shares would carry the voting rights in general meeting, carry an entitlement to any surplus assets in a winding up and have no fixed rate of dividend. This gives the ordinary shareholder the power to influence the policies of the company but makes his investment more speculative than the preference shareholder. In a financial year where the company makes a considerable profit and makes a large distribution by way of dividend, the ordinary shareholder has a right to participate after the preference shareholder rateably in the funds available. But, should the company have a poor year when little profit is made, the ordinary shareholder will receive very little or perhaps nothing. The position of the preference shareholder, then, is significantly better.
