Participation

Shares represent ownership in a company and come in various types, each offering different rights and privileges to shareholders. The main types of shares include:

1. Common Shares

• Definition: These represent basic ownership in a company. Shareholders can vote on corporate matters and may receive dividends.
• Key Features:
  • Voting rights (usually one vote per share).
  • Dividends are not guaranteed but may be issued at the discretion of the company.
  • Last to receive payouts in case of liquidation.

2. Preferred Shares

• Definition: These shares provide priority over common shares in terms of dividend payments and asset distribution during liquidation.
• Key Features:
  • Fixed dividend payments (often higher than common shares).
  • No or limited voting rights.
  • May be convertible into common shares.

3. Ordinary Shares (Equivalent to Common Shares in some regions)

• Definition: Similar to common shares, providing ownership in the company but with no special privileges.
• Key Features:
  • Voting rights and dividends based on company performance.
  • Higher risk compared to preferred shares.

4. Cumulative Preferred Shares

• Definition: A type of preferred share where unpaid dividends accumulate and must be paid out before any dividends to common shareholders.
• Key Features:
  • Protects shareholders against missed dividends.

5. Non-Cumulative Preferred Shares

• Definition: Preferred shares that do not accumulate unpaid dividends.
• Key Features:
  • Higher risk compared to cumulative preferred shares.

6. Redeemable Shares

• Definition: Shares that the company can buy back at a predetermined price after a certain date.
• Key Features:
  • Provides the company flexibility in managing share capital.
  • Often used to provide temporary funding.

7. Convertible Shares

• Definition: Shares that can be converted into a different type of share (usually common shares) under specific conditions.
• Key Features:
  • Combines features of preferred shares with potential for equity appreciation.

8. Growth Shares

• Definition: Shares designed to provide capital appreciation rather than immediate income.
• Key Features:
  • Often issued by startups or high-growth companies.
  • Dividends are typically reinvested into the company.

9. Deferred Shares

• Definition: Shares where dividends are paid after a specific condition is met or after other shareholders are paid.
• Key Features:
  • Lower priority for dividends.
  • Usually issued to founders or employees.

10. Founder’s Shares

• Definition: Shares typically issued to company founders, often with enhanced voting rights.
• Key Features:
  • May have restrictions on transferability.
  • Often carries disproportionate voting power.

11. Equity Shares with Differential Voting Rights (DVR)

• Definition: Shares with different voting rights compared to standard common shares.
• Key Features:
  • Either enhanced or reduced voting rights.
  • May have benefits such as higher dividends for reduced voting power.

12. Treasury Shares

• Definition: Shares that were once issued but have been repurchased by the company.
• Key Features:
  • Do not carry voting rights or dividend entitlements while held by the company.

Each type serves specific purposes and appeals to different kinds of investors, depending on their risk tolerance, income preferences, and investment goals.