What is the difference between an ordinary share and a preference share?

Ordinary shares typically carry voting rights and receive dividends that can vary. Preference shares usually have no voting rights but receive a fixed dividend and have priority over ordinary shares for dividends and assets if the company is liquidated.

Is 'ordinary share' used in American English?

It is understood but is much less common than 'common stock' or 'common share'. Using 'ordinary share' in a US context may be seen as formal or non-standard.

Do all ordinary shares have voting rights?

Typically yes, but some companies may issue non-voting ordinary shares. It's essential to check the specific share class details.

Are ordinary shares riskier than preference shares?

Generally, yes. Ordinary shareholders are last in line to claim company assets in liquidation (after creditors and preference shareholders) and dividends are not guaranteed, making them higher risk, but with potentially higher returns.

ordinary share

UK/ˈɔːd(ə)n(ə)ri ʃɛː/US/ˈɔːrdəˌneri ʃɛr/

Formal, Technical (Business/Finance)

My Flashcards

Definition

Meaning

A basic unit of company ownership that typically carries voting rights and a claim on dividends (after preference shareholders).

The most common form of equity in a corporation, representing residual ownership and the primary risk-bearing instrument in a company's capital structure.

Linguistics

Semantic Notes

Often contrasted with 'preference/preferred share' which has priority for dividends and assets in liquidation. The term implies no special rights or privileges.

Dialectal Variation

British vs American Usage

Differences

Primarily a British term. In American English, the equivalent is almost exclusively 'common stock' or 'common share'. 'Ordinary share' is understood but less common in US financial contexts.

Connotations

In British finance, it's the standard, neutral term. In American usage, 'ordinary share' can sound slightly formal or British.

Frequency

Very high frequency in UK business/finance. Low frequency in general American English, where 'common stock' dominates.

Vocabulary

Collocations

strong

issue ordinary shareshold ordinary sharesordinary share capitalvoting ordinary shares

medium

trade ordinary sharesprice of an ordinary shareconvert into ordinary sharesnew ordinary shares

weak

listed ordinary sharesfully paid ordinary shareauthorised ordinary shares

Grammar

Valency Patterns

[Company] issued [number] ordinary shares.[Investor] holds ordinary shares in [Company].The rights attached to the ordinary shares.

Vocabulary

Synonyms

Strong

equity share

Neutral

common stock (US)common share (US)

Weak

voting share (if it has voting rights)

Vocabulary

Antonyms

preference sharepreferred stock (US)debt instrumentbond

Phrases

Idioms & Phrases

“Have a slice of the ordinary share pie.”

Usage

Context Usage

Business

The company's capital consists of 1 million ordinary shares of £1 each.

Academic

The study analysed the volatility of ordinary share returns compared to government bonds.

Everyday

My pension fund is invested in the ordinary shares of several large companies.

Technical

Diluted earnings per share is calculated assuming all convertible instruments are exchanged for ordinary shares.

Examples

By Part of Speech

verb

British English

The board proposed to ordinary-share the reserves. (Rare, technical)

American English

The company will common-stock the dividend. (Rare, technical)

adjective

British English

The ordinary-share dividend was increased. (Attributive use)

American English

The common-stock equity rose. (Attributive use)

Examples

By CEFR Level

She bought some ordinary shares in a well-known supermarket chain.

Unlike preference shares, ordinary shares do not guarantee a fixed dividend payment.

The takeover bid valued each ordinary share at a 30% premium over the current market price.

Learning

Memory Aids

Mnemonic

Think: ORDINARY = common, usual. An ORDINARY SHARE is the common, standard type of share most people buy.

Conceptual Metaphor

OWNERSHIP IS A SLICE OF A PIE (An ordinary share is a standard slice of company ownership).

Watch out

Common Pitfalls

Translation Traps (for Russian speakers)

Avoid direct translation as 'обыкновенная акция' without confirming the exact financial context, as Russian 'обыкновенная акция' is the precise equivalent.
Do not confuse with 'привилегированная акция' (preference share).

Common Mistakes

Using 'ordinary share' in general American financial writing (use 'common stock').
Confusing 'ordinary share' with 'preference share' regarding dividend rights.

Practice

Quiz

Fill in the gap

In the US, the most common term for an 'ordinary share' is .

Multiple Choice

What is a key right typically associated with an ordinary share?

FAQ

Frequently Asked Questions

: Ordinary shares typically carry voting rights and receive dividends that can vary. Preference shares usually have no voting rights but receive a fixed dividend and have priority over ordinary shares for dividends and assets if the company is liquidated.
: It is understood but is much less common than 'common stock' or 'common share'. Using 'ordinary share' in a US context may be seen as formal or non-standard.
: Typically yes, but some companies may issue non-voting ordinary shares. It's essential to check the specific share class details.
: Generally, yes. Ordinary shareholders are last in line to claim company assets in liquidation (after creditors and preference shareholders) and dividends are not guaranteed, making them higher risk, but with potentially higher returns.