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Get Started in Shares by Glen Arnold

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Some more on ordinary shares

You know now that ordinary shares represent the equity capital of a firm and are a means of raising long-term finance to run the business. While some companies issue other types of shares (see Chapter 8) the vast majority of shares issued by companies are ordinary, which carry a special set of legal rights. Ordinary shareholders have a claim to a share of the company’s profits in the form of dividend payments. These are not automatic. They are paid only if the company has been successful enough to pay dividends and the company decides to pay them. In addition, in a worst-case scenario, the ordinary shareholders have a right to share in the proceeds of a liquidation sale of the firm’s assets, albeit after all other ...

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