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Ordinary (Equity) Shares These are the most commonly issued class of share which carry the main risks and rewards of the business: the risk are of losing part or all of the value of the shares if the business loses money or becomes insolvent; the rewards are that they take a share of the profits - in the form of dividends - and debenture interest, taxation and after preference dividends (if any). When a company makes large profits, it will have the ability to pay higher dividends to the ordinary shareholders; when losses are made, the ordinary shareholders may recieve no dividend. Companies rarely pay out all of their profits in the form of dividends; most retain some profits as reserves. These can always be used to enable a dividend to be paid in a year when the company makes little or no profit, always assuming that the company has insufficient cash...

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