Shareholder's Rights Many investors who buy securities are unaware of the rights that come with stock ownership. While specific rights depend on the type of security, the laws of the state where the company is incorporated, and the by-laws and charter of the company itself, some rights are standard.
Companies generally issue one or more of types of securities.
The better known are common stock, preferred stock and debentures or bonds. Investors who buy a share or shares of common or preferred stock are actually buying an equity or ownership interest in a company. Buying a debenture or bond is a kind of loan to the company. In return, the investor receives interest and repayment of the face amount of the bond at maturity. For example, a company's charter may state that only the common stock has voting privileges or that the preferred stock must receive dividends before any dividend is paid common stockholders.