Types of shares

In this lesson

1. 0:00 Understanding shares and shareholder rights
2. 0:28 Ordinary shares explained
3. 0:53 Preference shares and fixed dividends
4. 2:26 Redeemable and irredeemable shares
5. 3:25 Treasury shares and share buybacks

About this lesson

You'll explore what rights each share type grants (voting, dividends, liquidation claims), why companies issue different classes of shares, and how redeemable and treasury shares work as financing tools. This foundational concept appears across Financial Reporting, Financial Management, and Strategic Business Leader papers, and underpins your understanding of financial statements and corporate capital structures. The lesson breaks down ordinary shares as the closest thing to true ownership, giving you voting rights, dividend participation, and claims on surplus assets in liquidation. Preference shares offer fixed dividend payments and priority over ordinary shareholders, but sacrifice voting rights—making them function more like loans than ownership stakes. You'll also discover how cumulative dividends work (rolling forward if unpaid), and why preference shareholders get paid before ordinary shareholders but can't share in any surplus. Finally, you'll explore redeemable shares, which give companies the option to buy them back after a set period, and treasury shares, which are shares a company has repurchased from retained earnings and can hold or reissue without creating new shares. Understanding these distinctions helps you analyse company financing decisions, interpret financial statements accurately, and apply this knowledge to case study scenarios where capital structure matters.

Duration: 4m