What are stocks and shares?

Date: August 11, 2017

A share represents a part-ownership of a company. For example, if you buy 10,000 shares in a company that has issued one million shares, you own one percent of that company.

The most common type of shares are ordinary shares. Other types of securities include: preference shares, warrants, bonds, debentures and loanstocks.

What are ordinary shares?

Holders of ordinary shares have the right to share in the profits of the company after preference share holders have been paid their dividends. Holders of ordinary shares are paid dividends that vary according to the profitability of the company and the recommendation of the company’s directors. Should a company be wound up, its ordinary shareholders will receive a payout only after all other creditors, including unsecured creditors, have been paid.