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Chapter 5
Sources of equity finance
2.1 Terminology
Ordinary shares
Dividends paid at the discretion of the company's directors.
Ordinary shareholders are the owners of the company, attend
meetings and vote on any important matters.
Subordinate to all other finance providers on a winding up.
Preference shares
A form of equity that pays a fixed dividend, paid before ordinary
share dividends.
On a winding up, preference shareholders are subordinate to debt
holders and creditors, but receive their pay-out before ordinary
shareholders.
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