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The number of authorized shares can be increased by the shareholders of the company at annual shareholder meetings, provided a majority of the current shareholders vote for the change.
Unlike common stockholders, preferred stockholders have limited rights which usually does not include voting. 1 Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to appreciate in price.
With the issuance of the stock, both the common stockholders and the preferred stockholders gets a right in the ownership of the company. Therefore, ownership is the characteristic that does not sets the preferred stock apart from the common stock.
Preferred stockholders have priority over debt holders, with regard to the distribution of earnings and assets of the firm. Preferred stockholders have a higher priority claim to distributions made by the firm than common stockholders. The firm generally pays different amounts of preferred stock dividends each year.
Preferred stock. A class of ownership in a corporation that has a priority claim on its assets and earnings before common stock, generally with a dividend that must be paid out before dividends to common shareholders are paid.