Different Classes of Shares and the Benefits and the Disadvantages of Each Type of Shares.

2271 Words Mar 23rd, 2010 10 Pages
Introduction
First, we will mention about the purpose of this assignment, which is the benefit that we can gain from doing this project. From this project, it helps us to know the types of shares available in a company, definition of shares and the advantages and disadvantages of shares. From the information, this will enable a person who have interest invest in a company, purchase the shares that are suitable for them, based on the comparison between the advantages and disadvantages of each type of shares. Other than that, we can know the rights that attached to the shares.

On the other hand, we will mention that under what relevant case law or relevant sections, the rights of the shareholders will be changed or affected. These
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Besides that, as a member of the company, he has the right to receive the notice of general meeting, to request the financial report, to attend and speak during the general meeting, to appoint the director during the general meeting. Moreover, he has the right to appoint proxies in the event that they cannot themselves attend the general meeting.
As an ordinary shareholder, when the company is making a lot of profit, or in other word, in the event the company is prosperous, he stand to gain the most than preference shareholder as their dividend is higher compare to the fixed rate dividend received by preference shareholder. Furthermore, in the scenario of company winding up, an ordinary shareholder has the right to participate a share in any surplus assets of the company plus the repayment of his capital. Besides that, the Articles of Association require the company to offer any further shares it proposes to issue to the ordinary shareholders before offering them to outsiders, and usually the new shares are offered to the existing shareholders at a lower price than they would be offered to the outsiders.

Disadvantages of Ordinary Share As a member of the company, ordinary shareholder is the main risk bearer of the company. It means that these shares carry a right to a dividend limited only by the size of the profit made by the company and are paid after the preference shareholders. They will be the last to receive the dividend. The