PREFERRED SHARES

A share in a company that has some kind of special right or privilege attached to it, such as that it is distinguished from the company 's common shares . The most common special right is a preference over holders of common shares when dividends are declared. Another, is for the preferred shares to be redeemable at the option of either the holder or the company . Still another might be to disallow voting rights to preferred shareholders. Depending on the local laws in your state, there may be no limit to the qualifications a company can attach to preferred shares. For example, a family company may only allow holders of preferred shares to use a recreational property belonging to the company .