Preferred Stock
/prɪˈfɜrd stɒk/
Definitions
- (n.) A class of stock that has priority over common stock in dividend payments and asset distribution but usually lacks voting rights.
The company issued preferred stock to attract investors seeking stable dividends.
- (n.) Stock that confers preferential treatment such as fixed dividends and liquidation preference in the event of dissolution.
Preferred stockholders were paid before common shareholders during the liquidation.
Related terms
See also
Commentary
Preferred stock terms vary widely; drafters should specify rights, preferences, and any conversion features clearly to avoid ambiguity.
This glossary is for general informational and educational purposes only. Definitions are jurisdiction-agnostic but reflect terminology and concepts primarily drawn from English and American legal traditions. Nothing herein constitutes legal advice or creates a lawyer-client relationship. Users should consult qualified counsel for advice on specific matters or jurisdictions.