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Common Ordinary Equity

Common ordinary equity refers to the ownership interest that common shareholders have in a company. It represents the residual ownership in the company after all liabilities and debts have been paid off. Common ordinary equity holders have the right to vote on corporate matters, such as the election of the board of directors, and they may receive dividends if the company distributes profits. In the event of liquidation, common shareholders are the last to be paid, after creditors and preferred shareholders.

Example

An investor who purchases common stock in a company is acquiring common ordinary equity, giving them voting rights and a potential share of the company’s profits.

Key points

• Common ordinary equity represents ownership in a company held by common shareholders.

• Shareholders have voting rights and may receive dividends.

• In liquidation, common shareholders are paid after creditors and preferred shareholders.

Quick Answers to Curious Questions

Common shareholders have voting rights in corporate decisions and may receive dividends if the company decides to distribute profits.

Common equity holders have voting rights and are paid last in liquidation, while preferred equity holders have priority in receiving dividends and liquidation payments but typically lack voting rights.

In liquidation, common shareholders are paid last, after all debts and preferred shareholders have been satisfied.