Preferred Stock

April 20, 2009

A class of ownership in a corporation that has a higher claim on the assets and earnings than common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.


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The precise details as to the structure of preferred stock is specific to each corporation. However, the best way to think of preferred stock is as a financial instrument that has characteristics of both debt (fixed dividends) and equity (potential appreciation). Also known as “preferred shares”.


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There are certainly pros and cons when looking at preferred shares. Preferred shareholders have priority over common stockholders on earnings and assets in the event of liquidation and they have a fixed dividend (paid before common stockholders), but investors must weigh these positives against the negatives, including giving up their voting rights and less potential for appreciation.


Stock Certificate

April 14, 2009

In a corporate it is the Paper evidence of ownership. The certificate would indicate the type of stock (common, preferred), any restrictions pertaining to the sale of the stock, the number of shares, the par value, etc. Today, the larger corporations with many shareholders are likely to use electronic records instead of issuing the paper stock certificates.



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In corporate law a stock certificate which is also known as certificate of stock or share certificate, is a legal document that certifies ownership of a specific number of stock shares in a corporation.

Stock certificates are generally divided into two forms:


Registered stock certificates:
Bearer stocks certificates:


A registered stock certificate is normally only evidence of title, and a record of the true holders of the shares will appear in the stockholder’s register of the corporation.
A bearer stock certificate, as its name implies is a bearer instrument, and physical possession of the certificate entitles the holder to exercise all legal rights associated with the stock
Usually only shareholder with stock certificates can vote in a shareholders’ general meeting. Sometimes a shareholder with a stock certificate can give a proxy to another person to allow them to vote the shares in question. Voting rights are defined by the corporation’s charter and corporate law.