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Shares and Dividends

The articles of incorporation define how many shares, or ownership portions, the corporation will issue as well as what types of stock the corporation will issue. A corporation that issues only one type of stock issues common shares, or common stock. Common shareholders have the right to vote and also the right to the corporation’s net assets, also known as dividends. A corporation may designate different classes of common stock, with different voting and dividend rights for those shareholders. Preferred stock is a type of stock issued by corporations that in most cases do not grant the shareholder the right to vote. However, owners of preferred stock usually have greater rights to receive dividends than do owners of common stock.

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