This day we take the opportunity to clarify some basic concepts regarding the different types of shares with their main characteristics. Recall that the main difference between stocks and bonds is that the latter provide the holder the right to participate in the management of the company and a possible dividend out of profits which is however not guaranteed. The primary category is made up of ordinary shares which give the owners and property rights and administrative.
The preference shares are shares that ensure the shareholders’ priority in the process of distribution of profits and the capital repayment if the company is dissolved. In practice, preferred shares are allocated to a share of profits greater than that of the ordinary shares or a temporal precedence in the ex dividend date. In return for the above mentioned privileges the owners are limited in their right to vote which is granted to them only at the general meetings. The preference shares giving the holder the right to vote at ordinary shareholders’ meetings are called preference shares.
Savings shares are not entitled to vote at any meeting. On the other hand they are given preference in the distribution of dividends. The company that issued them is required to distribute profits to their owners until at least 5% of their nominal value. This type of action is typically purchased by small investors interested in the performance and are often bearers. The shares with limited voting rights are those for which the right to vote is limited compared to ordinary shares. In the extreme case in which each right is barred we are speaking of shares without voting rights.