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Simple English definitions for legal terms
ordinary shares
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A quick definition of ordinary shares:
Ordinary shares, also known as common stock, are a type of ownership in a company. When you buy ordinary shares, you become a part owner of the company and have the right to vote on important decisions and receive a portion of the company's profits. However, you are not guaranteed a fixed dividend like with preferred stock. The value of ordinary shares can go up or down depending on how well the company is doing and how the stock market is performing.A more thorough explanation:
Definition: Ordinary shares are a type of stock that gives the holder the right to vote on company matters, receive dividends after preferred shareholders, and share in assets upon liquidation. They are also known as common stock.
Example: If a company has 100 ordinary shares outstanding and you own 10 of them, you have a 10% ownership stake in the company. You can vote on important decisions, such as electing the board of directors, and you will receive a portion of any profits the company makes in the form of dividends.
This example illustrates how ordinary shares give the holder a voice in the company's management and a share in its profits.