Common shares are shares of stock that are understood to signify equity ownership in a corporation. Holding common shares in a company provide the investor with some basic privileges, such as limited voting rights, a return based on the profitability of the company, and possibly some benefit from appreciation in the securities associated with the company. All rights and privileges connected with the common share are encompassed with other types of shares that provide broader benefits and privileges.

When it comes to voice and vote in the operation of the company, common share holders typically are granted the privilege of participating in the election process for directors. It is unusual for investors holding common shares to be allowed to nominate candidates for a vacancy among the directors, although the bylaws of some companies do extend this privilege. Investors are sometimes able to vote their total number of shares. In other situations, each investor holding common shares will be allowed only one vote, regardless of the number of shares in his or her possession.

It is important to note that common shares do not carry the same level of benefits as preferred shares of stock. Along with minimal voting privileges, the investor holding common shares rarely enjoys a fixed dividend on the shares. Instead it is more common for the dividend to vary, based on the profitability of the company. This type of discretionary dividend arrangement means that the return on the investment is likely to vary from one period to the next.

In the event that a company fails, persons holding common shares usually do not receive any compensation until after all bond holders have been satisfied, and preferred share holders have received payment for their shares. Any remaining resources can then be utilized to make at least a partial settlement to common share holders. Due to the financial complexities of settling the debts of a failed company, it may take years to realize any compensation for the common shares involved.