I. Ordinary Shares
1. Ordinary shares are shares with ordinary rights in the management of the company's operations and distribution of earnings and property, representing the right to claim corporate earnings and residual property after satisfying all claims for repayment of debts and preferred shareholders' rights to income and claims for compensation. Ordinary shares form the basis of a company's capital and are a basic form of stock. The shares traded on the Shanghai and Shenzhen stock exchanges are all common shares.
2. Common shareholders enjoy the following basic rights in proportion to their shareholdings:
(1) The right to participate in corporate decision-making. The common shareholders have the right to participate in the general meeting of shareholders and have the right to propose, vote and elect, and may also appoint others to exercise their shareholders' rights on their behalf.
(2) The right to profit distribution. Common shareholders are entitled to receive dividends from the distribution of the company's profits. Dividends on common shares are not fixed and are determined by the company's profitability and its distribution policy. Common stockholders must receive a fixed dividend before preferred stockholders are entitled to dividend distribution rights.
(3) Preferred stock options. If the company needs to expand and issue additional common stock, the existing common stockholders have the right to purchase a certain number of newly issued shares at a specific price below the market price according to their shareholding ratio, so as to maintain their original proportion of ownership of the enterprise.
(4) The right to distribution of surplus assets. In the event of bankruptcy or liquidation of the company, if the company's assets are still remaining after repayment of outstanding debts, the remaining portion will be distributed in the order of preferred shareholders first, followed by common shareholders.
Two, preferred shares
1, preferred shares versus common shares. Preferred shares have priority over common shares in terms of the right to profit sharing and distribution of surplus property.
(1) Preferential distribution rights. In the company's distribution of profits, shareholders with preferred stock than holders of common stock, distribution in the first, but enjoy a fixed amount of dividends, that is, preferred stock dividends are relatively fixed.
(2) Preferential claims. If the company is liquidated and the remaining property is distributed, the preferred stock is distributed before the common stock. Note: When a company decides not to distribute dividends for several consecutive years, preferred shareholders can enter the shareholders' meeting to express their opinions and protect their own rights.
Three, post-allotment shares
1. Post-allotment shares are shares that are at a disadvantage compared to common shares when it comes to the distribution of benefits or interest dividends and residual property, and are generally redistributed after the distribution of common shares for residual benefits. If the company's earnings are huge and the number of post-allotment shares issued is limited, shareholders who purchase post-allotment shares can achieve high returns. Post-allotment shares are generally underutilized because the funds raised do not generate immediate income and the range of investors is limited. Post-allotment shares are generally issued under the following circumstances:
(1) when a company issues new shares to raise funds for the expansion of equipment, in order not to reduce the dividends on the old shares, the new equipment is formally put into use before the new shares will be issued as a post-allotment shares;
(2) in the event of a merger of enterprises, in order to adjust the ratio of consolidation, a portion of the post-allotment shares are delivered to the shareholders of the merged enterprise;