March 03, 2019

Features Of Common Stock

Key characteristics or features of common stock can be expressed as follows:

1. Long-term Source

It is a long-term source of financing. It is most popular method to raise permanent capital.

2. Par Value

Issuer sets the par value of common stock. Generally, par value of stock is divisible by 10 such as $10, $20, $50, $100 etc.

3. No Maturity

Another feature of common stock is that it lacks maturity period. It is a permanent capital and exists till the existence of the company.

4. Ownership

Common stock holders are the real owners of the company. So, it provides ownership to the investors.

features-common-stock

5. Limited Liability

In case of business failure, stockholders lose their investment. But their liability is limited to their investment or par value.

         
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6. Residual Claim

Stockholders have residual claim on the income and other properties in case of failure, liquidation or bankruptcy.

7. Voting Right

Common stockholders get voting right in the election of board of members and they can take part in annual general meet of the company.