Types of Shares

There are two types of shares, ordinary shares and preference shares.

  • Ordinary shares are the most familiar type of shares and have flexible dividends (dividends that are adjusted in relation to a company's profit). These shares also allow full voting rights.
  • Preferred shares carry fixed dividends, which must be paid before any dividends are paid to ordinary shareholders. However, preferred shares do not allow voting rights.

Remember that when dealing with shares in the stock market as we know it, it will practically always be involving ordinary shares and this should not be a very big issue!