Question

Outline the differences between, ordinary shares, preference shares, unclassified shares as well as
blank shares.

Answer 1

Ordinary share also called common share is an equity instrument which provides ownership in company proportionally as per the holding .It provides voting right to the shareholder .Common share holders are entitled to dividend after preferred stock.In other words ,we can say that they have right to residual profits left after paying preferred stock.

While preference share also called preference stock are shares which are entitled to receive dividend before common stock holders .If company enters bankruptcy then they are given priority over common shares.Another major difference between common shares and preference shares is that preference shares are not entitled to vote and also generally dividend is fixed unlike ordinary shares

As the name suggests unclassified are those shares which are not classified as of being a specific type or belonging to a specified class of shares like ordinary ,preference ,voting ,non voting.

Blank shares are those shares which do not have any rights attached to it at the time of issuance .for example whether entitled to voting or not ,whether guaranteed dividend or not is not determined at the time of issuance .This is determined by board of directors after issuance.