Basics Of The Shares Issued By The Organization

Basics Of The Shares Issued By The Organization

Companies issue shares with the sole purpose to raise the capital. There are different types of shares an organization will opt to offer to its investors. Usually, the small companies issue ordinary shares which have the right to vote, dividend claim and also the right to the asset distribution.  However, in the case of a large organization with a huge turnover, it is an entirely different situation.  They will have different kinds of the share which comes with different types of rights, conditions, and ownership.

If you are planning to buy the shares for investment purpose, you need to have a clear understanding of the types of shares issued by the company. If you are just buying a share to speculate and trade, then in-depth knowledge of the shares are not needed but still, it would be always beneficial if you have an idea about the shares you are dealing with.  You can also enter into trading of virtual currencies if you are interested in speculative trading. Learn more about it here.

Types of shares

Ordinary shares– The most common kind of shares issued by the organizations are the ordinary shares.  They usually come with one vote for each share you own and they are also entitled to receive the dividend of the company as and when declared. Whenever the organizations get wound up, all the proceeds will be equally allocated among all.

Preference shares- In the case of preference shareholders, the owner of the shares are entitled to receive a pre-fixed amount as a dividend each year. And it would be distributed to them before the dividends are paid to the ordinary shareholders. The dividend would be the percentage of nominal value.

Non- voting shares-  The shareholders of these types of shares do not carry any right to vote neither they can attend the general meetings of the organization.  Usually, these shares are issued to the employees so that the remuneration will be paid in order to enjoy tax benefits for both the parties.

Redeemable shares- These shares are issued by the company to the shareholders on certain terms that it may buy back those shares in a future date.  The date would be either at the discretion of the director or will be fixed.  This also does not offer any right to vote for the holders and are mainly given to the employees. Whenever the employees leave the organization, the shares would be taken back by the organization at the nominal value.