Partnership and Corporation Practice Exam

Preferred shares are typically considered non-voting shares. This classification stems from the structure and purpose of preferred shares, which often provide holders with certain financial privileges, such as priority in dividend payments and claims on assets in the event of liquidation, rather than voting rights. Corporations issue preferred shares primarily to attract investors seeking stable income without the involvement in corporate governance decisions, which aligns with the characteristics of equity designed primarily for security rather than participation.

Common shares, on the other hand, usually carry voting rights, allowing shareholders to influence corporate decisions, such as electing directors or approving significant corporate transactions. Redeemable shares can be either common or preferred and may include voting rights depending on the specific terms defined by the company. Escrow shares are contingent upon specific conditions being fulfilled, which means their status regarding voting rights could vary, but they are not typically categorized as non-voting shares.

Thus, preferred shares are recognized for their primary financial benefits and lack of voting rights, making them the correct answer in the context of this question.