Preferred Stock

Preferred Stock

Preferred Stock is.

part of the capital stock of a corporation that enjoys priority over the remaining stock, or common stock, in the distribution of dividends and, in the event of dissolution of the corporation, also in the distribution of assets. Shares or stock which carry a right to a prior and usually fixed dividend, ahead of dividends paid to ordinary shareholders. See Section 306 Stock.

See Dividend in the American Legal Encyclopedia and Dividend in the World Legal Encyclopedia.

Description and Definition of Preferred Stock

A higher class of stock than common stock. Preferred shareholders are paid their dividends before common shareholders and have a preference claim on any assets and liquidation proceeds.

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