Common Stock Legal Meaning and Definition

Here is a simplified definition of the legal term Common Stock.

Common Stock (noun):

Common stock is a type of share or ownership in a corporation. Holders of common stock typically have the right to vote at shareholder meetings and may receive dividends, which are portions of the company's profits. However, these dividends are not guaranteed and are only paid out if the company is making a profit. Unlike preferred stockholders, who receive a fixed percentage of dividends and do not usually have voting rights, common stockholders' dividends and rights may change based on the company's successes or failures.