What are common shares in a corporation?

Common shares, often referred to as ordinary shares, represent ownership in a corporation and typically come with both the right to participate in the profits of the company and the right to vote on corporate matters. Holders of common shares are entitled to a portion of the company's profits, often in the form of dividends, which are paid after any obligations to preferred shareholders have been satisfied.

Additionally, common shareholders usually have voting rights that allow them to influence decisions such as the election of the board of directors and other significant corporate actions. This combination of profit participation and voting power is what characterizes common shares as a fundamental feature of corporate equity.

In contrast, shares that do not grant voting rights do not fully capture the essential characteristics of common shares. VIP customer shares or those solely issued to a specific group do not reflect the broad ownership and participatory nature of common shares. Lastly, preferred shares are a different class of stock that typically provides fixed dividends and may not carry voting rights, diverging from the definition of common shares.