In general, most companies would issue only one type of shares, known as ordinary shares. That said, the Singapore company law is flexible and allows for the creation of different types of shares, so that the respective shareholders are given varying rights to the company (commonly referred to as “classes of shares”).
The Value of Ordinary Shares
In many jurisdictions, ordinary shares have a stated “par value” or face value, but this is a technicality and is often set at a few pennies per share.
There are two major types of share value including:
- Market value.
- Face value or par value.
Three characteristic benefits are typically granted to owners of ordinary shares: voting rights, gains, and limited liability. Common stock, through capital gains and ordinary dividends, has proven to be a great source of returns for investors, on average and over time.
The 10p is just what they were nominally worth when they were issued. If in doubt, check with a stockbroker. 24/01/2011 01:38 samels001. If the share certificate is quite old, you might need to check that it is still valid. When companies re-organise their share capital they sometimes re-issue share certificates.
Preference, or preferred shares give owners preferential dividend payments and equity rights in liquidation. … Debentures have higher seniority for liquidation repayment than preferred shares, but may pay lower yields. The relative level of risk is a primary factor differentiating preferred shares and debentures.
Companies typically choose to issue ordinary, voting shares as their primary source of share capital. Ordinary shares are the most attractive to founding shareholders and investors seeking high returns, as they offer the greatest potential return and potentially some control over the company.
Non-voting ordinary shares usually carry no right to vote and no right to attend general meetings. These shares are usually given to employees so that remuneration can be paid as dividends for the purposes of tax efficiency for both parties.
Class A shares are common stocks, as are the vast majority of shares issued by a public company. Common shares are an ownership interest in a company and entitle purchasers to a portion of the profits earned. Investors in common shares are usually given at least one vote for each share they hold.