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Home > General Insurance > Business Life Insurance 12 - Advantages and Disadvantages of Common and Preferred Share Holders Business Life Insurance 12 - Advantages and Disadvantages of Common and Preferred Share HoldersAuthor: Kyle J Norton As we mentioned in the previous article, we know that corporations generally are started by it's original shareholders who provide the start-up cash or assets in exchange for their shares. The corporation may eventually be owned by a large number of shareholders. In this article, we will discuss the structures of corporation shares and types of shares that corporation can issue. There are 2 types of corporation shares: common shares and preferred shares. These shareholders have certain rights:1. Common share holders a) Advantage * right to share in growth of earnings and assets. *right to sell shares. * right to vote on Board of Directors and certain issues. * right to attend company meetings and examine the books. * right to annual report. * receive a tax credit on Canadian corporate share dividends. b) Disadvantage * last to receive a portion of assets on wind-up of a company. *dividends are only paid when declared and are related to amount of net earnings. *dividends are paid after bond interest and preferred share dividends. 2. Prefer share holders a) Advantage * dividends are paid before common shareholders but after bond interest * bonds holders come before preferred shares at the wind-up of the company. b) Disadvantage * Less indication of company ownership * Corporation dividends are usually fixed by the share certificate and affected by the profitability of the company and the intent of the Board of Directors. I hope this information will help you understand more of the right of corporation shareholders. If you need more information, please visit my home page at: Kyle J. Norton Other Recent Insurance Smart Book Articles:
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