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Meaning / Definition of

Common Shares

Categories: Stocks,

Securities representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company's success throughdividends and/or capital appreciation. In the event of liquidation, common shareholders have rights to a company's assets only after bondholders, other debt holders, and preferred shareholders have been satisfied. Typically, common shareholders receive one vote per share to elect the company's board of directors (although the number of votes is not always directly proportional to the number of shares owned). The board of directors is the group of individuals that represents the owners of the corporation and oversees major decisions for the company. common shareholders also receive voting rights regarding other company matters such as stock splits and company objectives. In addition to voting rights, common shareholders sometimes enjoy what are called "preemptive rights". preemptive rights allow common shareholders>to maintain their proportional ownership in the company in the event that the company issues another offering of stock. This means that common shareholders with preemptive rights have the right but not the obligation to purchase as many new shares of the stock as it would take to maintain their proportional ownership in the company. also called junior equity or common stock.

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Definition / Meaning of

Franchised Monopoly

Categories: Business and Management,

A government-granted monopoly. The most important reason for the government granting a monopoly is in the case of the product or service being a natural monopoly, i.e. unable to sustain more than one producer. This is usually the case when very large economy of scale is needed to make production efficient (so the marginal cost of producing each additional unit is very low). Thus, given the huge scale of production needed for efficiency, it could be that the entire market demand would be fulfilled by a single efficient producer, making it unfeasible to have a second producer in the market. Thus, the government may decide to simply give a producer a monopoly, so that the producer is convinced of the fact that there is adequate market to achieve efficient scale. A government may also choose to grant monopolies in special conditions such as when they want to encourage a specific kinds of innovation (patents are effectively a government-granted monopoly), give preference to a producer who might also be involved in community development activities etc.

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