Here are some notes about non-voting shares of a company in detail:
- Definition: Non-voting shares are shares that do not give the holder the right to vote on matters that come before the company’s shareholders.
- Purpose: The purpose of non-voting shares is to provide investors with an opportunity to own a portion of the company without giving them control over the company’s operations.
- Types: There are two main types of non-voting shares: preference shares and deferred shares. Preference shares have priority over ordinary shares in terms of receiving dividends and in the event of a liquidation. However, they do not have voting rights. Deferred shares are a type of preference share that has a lower priority than other preference shares. They typically do not have voting rights and may not receive dividends until all other classes of shares have been paid.
- Benefits: There are a number of benefits to owning non-voting shares, including:
- Guaranteed income: Preference shares typically have a guaranteed dividend, which means that the investor will receive a certain amount of income each year.
- Capital appreciation: The value of non-voting shares can appreciate over time, just like the value of ordinary shares.
- Liquidity: Non-voting shares can be bought and sold on the stock market, which means that they are relatively liquid.
- Drawbacks: There are also a few drawbacks to owning non-voting shares, including:
- No control: The investor does not have any control over the company’s operations.
- Lower dividends: The dividends on non-voting shares are typically lower than the dividends on ordinary shares.
- Less potential for capital appreciation: The potential for capital appreciation is lower for non-voting shares than for ordinary shares.
Ultimately, the decision of whether or not to invest in non-voting shares depends on the individual investor’s goals and risk tolerance.