Common Share
Action ordinaire in French
Quick definition
A common share is the standard form of ownership in a corporation: it carries a vote, a share of any dividends the board declares, and an unlimited claim on the company's growth. In exchange, it stands last in line if the company fails.
The default form of equity
When people say "stocks", they almost always mean common shares. It is the plain, standard unit of corporate ownership: the kind founders hold, the kind that trades on the exchange under the company's name, and the kind that fills every broad index fund from top to bottom. The general mechanics of ownership, returns and risk are covered in the stock article; this one focuses on what makes the common share "common".
What a common shareholder gets
The common share bundles three rights, and one hard condition:
- A vote. Usually one per share, cast at the annual meeting to elect the board of directors and to approve major transactions such as mergers or large share issues. You vote by proxy from home; showing up in person is optional.
- Dividends, but only when declared. A dividend on common shares is a decision the board makes each time, not a debt the company owes you. The board can raise it, cut it, or cancel it outright, and shareholders have no legal claim to payments that were never declared.
- Unlimited upside. Creditors are owed fixed amounts; common shareholders own everything above those amounts. If the business multiplies in value over the years, all of that growth belongs to the common shares. No other security in the company's structure has an open-ended claim.
- Last in line. The mirror image of unlimited upside. In an insolvency, the company's assets pay creditors and bondholders first, then preferred share holders, and common shareholders split only what remains, which is very often nothing.
Dual-class shares: a notable Canadian feature
Not every common share carries one vote. A number of well-known Canadian companies, many of them founder- or family-controlled, issue two classes of common shares: a multiple-voting class kept by the controlling family, and a subordinate voting class sold to the public with one vote or none. The economics of the two classes are usually the same, so public shareholders get the same dividends and the same price exposure, but control of the company stays with holders of the multiple-voting class even when they own a minority of the total equity.
Whether that is good or bad is genuinely debated. Supporters argue it lets management build for the long term without pressure from short-term shareholders; critics note that it entrenches insiders whoever they turn out to be. Practically, if you buy shares of a dual-class company, read which class you are getting: your vote may matter less than the ticker suggests.
In Canada
Dual-class structures are more common on the Toronto Stock Exchange than in many other markets, and index providers generally include the publicly traded subordinate class in the main Canadian indexes, so most Canadian index fund investors hold some low-vote shares without ever noticing.
Dividends paid on common shares of Canadian public companies are generally eligible for the dividend tax credit, one of the reasons Canadian dividend-paying commons are a fixture of taxable portfolios in this country.
Worked example
Claire owns 300 common shares of a Canadian retailer. Each spring she receives the proxy circular and votes online for the board. For six years, the company pays and gradually raises its dividend, and her shares nearly double. In year seven, a bad stretch hits: the board cuts the dividend to zero to conserve cash.
Claire has no claim to the cancelled dividend; it was never owed. But her ownership itself is untouched: she still holds the same 300 shares, the same votes, and the same open-ended stake in the recovery, if it comes. That trade, no guarantees but full participation, is the entire personality of the common share.
Related terms
Reviewed by Alexandre Bernier, CFP®, CIM®, PFP®·Updated August 2026