Business & Finance Stocks-Mutual-Funds

Preferred Shares & Bankruptcy

    Ownership Rights

    • When a party buys a share of stock, he receives a certain proportion of ownership rights in the company. In addition to any voting or dividend rights, the stockholder typically has the right to return of his investment in the event the company chooses to liquidate.

    Preferred Shares

    • Unlike common stock ownership, ownership of preferred shares typically does not include the right to vote on the board of directors or other company matters. Preferred shareholders generally receive dividends from the company in fixed amounts at regular intervals. Companies may also have various classes of preferred stock.

    Bankruptcy

    • If the company declares bankruptcy and liquidates, various parties stand in line for repayment. If there aren't enough assets, preferred shareholders receive repayment on their investment before common shareholders, but do not receive repayment until all of the company's secured creditors and any bondholders have received repayment.

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