Common stock usually gives shareholders voting rights in company elections. These rights commonly include voting on directors and certain major corporate actions, although the exact terms depend on the company’s governing documents and share classes.
Common stock is the standard form of corporate equity for many publicly traded companies. Holders may benefit from price appreciation and dividends, but neither is guaranteed. In a liquidation, common shareholders generally rank behind creditors and preferred shareholders.
Companies can issue multiple classes of common stock with different voting powers. For example, one class may carry more votes per share than another, allowing founders or other holders to retain greater control while the company has public investors.
Preferred stock is another form of equity. It often has priority over common stock for dividends and liquidation proceeds, but it may have limited or no ordinary voting rights. The rights attached to each security are set by its terms.