Common and preferred shares: what actually differs
beginner
Automated material · TradeAlmanac editorial deskDraft prepared by a language model from our stored data; not reviewed by an editor.
Many Russian companies have two classes of shares trading at once, and the difference between them is not cosmetic.
The common share
It carries a vote at the shareholders meeting and a right to a dividend if one is declared. No priority: creditors and preferred holders are paid first, and what remains is what remains.
The preferred share
Usually no vote, but priority: its dividend is declared first and is often calculated by a formula written into the company charter.
The vote comes back
If the preferred dividend is not paid, those shares typically acquire voting rights until payments resume. The mechanism protects a holder from ending up with neither the money nor any influence.
Why the prices differ
The gap between the two classes is the price of the vote plus the market's estimate of non-payment risk. For a private investor the vote rarely has practical value: their stake does not change the outcome of any ballot.
Hence a common approach: all else equal, prefer the cheaper class. The caveat is liquidity — preferred issues usually trade in smaller volume, see Liquidity: noticed only once it runs out.
What to check before buying
The charter's wording on the preferred dividend, the payment history, and the price gap between classes. Related reading: Dividend policy: how to read it and what to believe in it.
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Draft prepared by a language model from our stored data; not reviewed by an editor.
Model: claude-opus-5
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