Each company’s charter is different, but publicly traded ones will typically have different levels of ownership. This often means that there are three classes of securities: bondholders, preferred stockholders and common stockholders. Each has its advantages, but common stockholders are at the bottom of the ownership pecking order. Nevertheless, they still have certain benefits.
The benefits of common stock ownership
Each company is different, but the common stockholder can often exercise influence and reap benefits:
- Ownership: Like the other levels, they can see their stock values go up when the company is successful. There may also be stock dividends.
- Power to vote: Common shareholders can vote individually or by proxy for significant changes, major decisions or elect directors.
- Selling stock: They can sell when they want.
- Accountability: Common shareholders can file a class action if there is a dispute or fiduciary breach.
- Access to the books: They can examine important documents or bylaws, read the board minutes and generally gather insight into the company’s health.
There may be other benefits like discounts on the products and services offered by the company.
Knowledge is power
There are many laws and regulations that publicly held companies must follow. Nevertheless, common shareholders who research and understand their rights can protect their interests as well as those of their fellow stockholders. If something does not seem right, they can take appropriate action to address the concern or dispute. It may involve litigating the matter in court.