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Common Stock

The lowest level of stock in a corporation is common stock. The rights related to common stock depend largely on the articles of incorporation and by-laws of the corporation. In general, owners of common stock have voting rights in a corporation as well as rights to receive distributions of money from the corporation (dividends). In a successful corporation, common stock ownership can be very lucrative. However, if a corporation is unsuccessful, common stock owners are usually the last in line to receive a distribution of the corporation’s assets when the corporation’s assets are liquidated.

State statutes often vary with respect to the default rights of common stock owners. The corporation may also issue multiple classes of common stock, such as nonvoting common stock or common stock with special dividend rights.

Inside Common Stock