What is Common Stock
What is Common Stock?

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What is Common Stock?

There are usually two different types of Stock that a Corporation can issue, Common Stock and Preferred Stock. Some states also allow a Corporation to also issue Undesignated Stock.

Common Stock is what Corporations normally issue to Shareholders. Preferred Stock, on the other hand is more like a bond or promissory note. Preferred Stock carries a fixed dividend percentage rate.

Common Stockholders receive a pro-rata share of the assets of the Corporation upon its dissolution if assets are available. Common Stock can be voting, or non-voting. Holders of voting Common Stock get to elect the Board of Directors of the Corporation, and thereby exercise control of the Corporation.

Holders of non-voting Common Stock do not get to elect the Board of Directors, but they still receive their pro-rata share of the Corporation's assets upon its dissolution if assets are available.

Common Stockholders may be eligible to receive dividends if Corporate profits allow. Holders of Preferred Stock get paid dividends first. If there are profits left after paying the Preferred dividends, then dividends are paid to the Common Shareholders. That's why it's called Preferred Stock - dividends on it are paid first. There is a drawback, however. As a trade-off for getting dividends first, Preferred Shareholders usually do not get to vote on matters affecting the Corporation. Preferred Stock is usually nonvoting.
CORPORATE GLOSSARY
 
Administrative Dissolution
Agent for Service of Process
Apostille
Apportionment
Articles of Incorporation
Articles of Organization
Assumed Name
At Will LLC
Authorized Shares
B Corporation
Benefit Corporation
Board of Directors
Business Dissolution
Business Entity
Bylaws
Certificate of Existence
Certificate of Status
Certified Copy
Close Corporation
Common Stock
Conversion
Corporate Bylaws
Corporate Name Reservation
Corporate Stock
DBA
Disregarded Entity
Dividends
ESOP
Excise Tax
Federal Tax ID
Ficticious Name
Foreign Qualification
Franchise Tax
General Partnership
Good Standing Certificate
Incorporator
Involuntary Dissolution
IRS Form 966
ITIN
Limited Liability Company
Limited Partnership
Liquidation
LLC
LP
Majority Shareholder
Meetings
Merger
Nexus
Non-Stock Corporation
Nonprofit Corporation
Obligated Member LLC
Organizer
Paid-in Capital
Paid-in Surplus
Par Value
Personal Service Corporation
Preferred Stock
Privilege Tax
Professional Corporation
Professional Service
Proxy
Registered Agent
Registered Office
Reporting Requirements
Revocation
S Corporation
Series LLC
Service Mark
Shareholder
Sole Proprietor
Stated Capital
Statutory Agent
Stock Certificate
Term LLC
Trade Name
Trademark
Trust
Trustee
Winding Up
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