This is part of a series of articles sponsored by NIC bank. NIC will be having a rights issue starting 27th August. Read more about their rights issue here.

Simply put, a share is a unit of ownership. A share of the ownership. If you own 2 out of 4 shares of a company, you own 50% of the company. Holders of shares are called shareholders.

There are two main types of shares, ordinary shares and preference shares. Ordinary shareholders possess different characteristics to preference shareholders:

1. Ordinary shareholders have voting rights while preference shareholders do not have any voting rights.
2. Ordinary shareholders may or may not receive dividends while preference shareholders have a fixed dividend amount that is paid to them. Ordinary shareholders can thereby receive even higher dividends than preference shareholders or none at all.
3. Ordinary shares are tradable (if the firm is listed on a stock exchange) while preference shares are not (necessarily) tradable (unless the preference shares are specifically listed on a stock exchange).

Normally, each share held translates to a vote. Therefore if you have 10 shares out of 100 shares, your vote accounts for 10% of the total vote.