Do ordinary shares always pay dividends?

No, dividends on ordinary shares are discretionary and paid only after dividends on preference shares are settled, and if the company has sufficient profits.

Can ordinary shares have different classes?

Yes, companies can issue different classes of ordinary shares (e.g., 'A' and 'B' shares) with varying rights, such as different voting powers or dividend entitlements.

What happens to ordinary shares if a company goes bankrupt?

Ordinary shareholders are last in line to claim any remaining assets, after all creditors and preference shareholders. They often lose their entire investment.

Is 'common stock' exactly the same as 'ordinary shares'?

Yes, in economic substance and typical rights, they are identical. The difference is purely terminological and jurisdictional (UK vs US English).

ordinary shares

UK/ˈɔː.dɪ.nər.i ʃeəz/US/ˈɔːr.də.ner.i ʃerz/

Formal / Business / Financial

My Flashcards

Definition

Meaning

The most common type of shares issued by a company, representing basic ownership equity and typically carrying voting rights and entitlement to dividends after preferred shareholders.

Ordinary shares constitute the foundational equity capital of a company. Holders share in the company's profits through dividends and capital growth, but also bear the highest risk, as they are last in line for payments in liquidation. These shares usually grant one vote per share at shareholder meetings.

Linguistics

Semantic Notes

This is a countable plural noun (shares). The term is compound and functions as a single lexical unit. In context, 'ordinary' does not mean 'commonplace' but specifies a class of security with particular rights and risks, contrasted with 'preference/preferred shares'.

Dialectal Variation

British vs American Usage

Differences

The term 'ordinary shares' is standard in UK and Commonwealth English (e.g., Australia, Singapore). In US English, the equivalent term is almost universally 'common stock' or 'common shares'. The legal rights and economic substance are identical.

Connotations

No significant connotative difference; both are neutral, technical financial terms.

Frequency

'Ordinary shares' is high-frequency in UK financial contexts and near-zero in general US discourse, where 'common stock' dominates.

Vocabulary

Collocations

strong

issue ordinary shareshold ordinary sharesordinary shares carryvoting rights attached to ordinary sharesdividends on ordinary shares

medium

number of ordinary sharespurchase of ordinary sharesvalue of ordinary sharesclass of ordinary sharestrade ordinary shares

weak

company's ordinary shareslisted ordinary sharesfully paid ordinary sharesauthorised ordinary sharesnew ordinary shares

Grammar

Valency Patterns

[Company] issued [number] ordinary shares.The rights attaching to the ordinary shares include...Ordinary shares in [Company] are traded at...

Vocabulary

Synonyms

Strong

voting shares (when they carry the vote)common equity

Neutral

common stock (US)common shares (US)equity shares

Weak

sharesstockequity

Vocabulary

Antonyms

preference sharespreferred stockdebt securitiesbondsnon-voting shares

Phrases

Idioms & Phrases

“to be in the ordinary (archaic, unrelated)”
“out of the ordinary (unrelated idiom)”

Usage

Context Usage

Business

Standard term in company reports, prospectuses, and investment discussions in the UK. E.g., 'The resolution to issue new ordinary shares was passed.'

Academic

Used in finance, economics, and business law textbooks and papers to discuss corporate capital structure and shareholder rights.

Everyday

Rare in casual conversation unless discussing personal investments in UK/Commonwealth markets.

Technical

Precisely defined in Companies Act (UK) and corporate charters; key for calculating earnings per share (EPS) and ownership percentages.

Examples

By CEFR Level

The company has many owners who hold ordinary shares.

If you buy ordinary shares, you own a small part of the company.

Investors holding ordinary shares are entitled to vote at the annual general meeting.

The takeover bid offered a premium of 30% over the market price for the company's issued ordinary shares.

Learning

Memory Aids

Mnemonic

Think: ORDINARY = ORDinary owners have the primary right to vote and the primary risk, in ORDer after preferred shareholders.

Conceptual Metaphor

OWNERSHIP IS A SLICE OF A PIE (ordinary shares are the basic slices), RISK/REWARD IS A LADDER (ordinary shareholders are on the top rung for reward but bottom for security).

Watch out

Common Pitfalls

Translation Traps (for Russian speakers)

Avoid translating 'ordinary' as 'обычный' in a dismissive sense; it is a formal class. The standard financial translation is 'обыкновенные акции'.
Do not confuse with 'простые акции' (a less formal equivalent).
The US term 'common stock' might be translated as 'обыкновенные акции' too, causing confusion about jurisdiction.

Common Mistakes

Using 'ordinary shares' in a US context instead of 'common stock'.
Treating it as an uncountable noun (e.g., 'I bought some ordinary share').
Confusing 'ordinary' with 'regular' in non-financial senses.

Practice

Quiz

Fill in the gap

In the UK, the basic form of company ownership is called , whereas in the US it is typically referred to as common stock.

Multiple Choice

What is the primary distinction between ordinary shares and preference shares?

FAQ

Frequently Asked Questions

: No, dividends on ordinary shares are discretionary and paid only after dividends on preference shares are settled, and if the company has sufficient profits.
: Yes, companies can issue different classes of ordinary shares (e.g., 'A' and 'B' shares) with varying rights, such as different voting powers or dividend entitlements.
: Ordinary shareholders are last in line to claim any remaining assets, after all creditors and preference shareholders. They often lose their entire investment.
: Yes, in economic substance and typical rights, they are identical. The difference is purely terminological and jurisdictional (UK vs US English).