Legal Definitions - ordinary shares

Definition: Ordinary shares are a type of stock that gives the holder the right to vote on company matters, receive dividends after preferred shareholders, and share in assets upon liquidation. They are also known as common stock.

Example: If a company has 100 ordinary shares outstanding and you own 10 of them, you have a 10% ownership stake in the company. You can vote on important decisions, such as electing the board of directors, and you will receive a portion of any profits the company makes in the form of dividends.

This example illustrates how ordinary shares give the holder a voice in the company's management and a share in its profits.