What Is Common Stock?
Common stock is the most basic kind of stock that a company can emit. Owning common stock from a company means that the stockowner owns a piece of the company. This ownership can be executed through his voting rights: one share, one vote. Proprietors of common stock can choose the members of the board and even decide determined policies.
Besides the voting rights, there are occasions in which common stock owners have pre-emptive rights. These rights permit common stock owners the possibility of owning the same percentage of the company in case the organizations emits new stock. So, any common stock owner can buy, if he chooses to do so, an additional percentage of stock in order to maintain his level of ownership of the corporation.
Finally, common stock owners can receive dividends for their shares. If the board of directors approves common stock dividends, a determined amount of money is distributed among the thousands of people who have bought common stock. For example, let’s say that the board of directors decided to pay $0.01 per share and that a determined individual owns 10,000 shares. That means that he will receive dividends for $100.