Preferred shares, also known as preferred stock, are a class of ownership in a company that offers a higher claim to the company's assets and earnings than ordinary shares (common stock).

Holders of preferred shares are paid dividends before ordinary shareholders, often at a fixed rate, whereas dividends for ordinary shareholders are declared by the company depending on its financial performance that year. However, preferred shares usually carry no voting rights.

If a company gets liquidated, holders of preferred shares have a prior claim to the company's assets compared to ordinary shareholders. However, their claim still comes after the claims of creditors. 

When you create documents on Zegal, make sure you choose the right class of share in the Document Builder, for example when using an Instrument of Transfer or Contract Notes for the transfer of shares.

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