Ordinary Shares

Ordinary shares represent the ownership of a limited company. Companies are incorporated with an authorised share capital Ð for instance 1,000 ordinary £1 shares. They do not have to issue all the authorised shares, but can issue as many as they like up to the authorised number. Once issued the shares can be traded either privately or on an exchange if the company has listed them. The price at which they trade will have nothing to do with the par value, but will be determined by market forces. Shares usually come with a right to vote at the companys Annual General Meeting, and an entitlement to a share of dividends declared. They are, however, unsecured, meaning that shareholders are last in the queue if a company goes into liquidation. Known as common stock in the US.