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Unformatted text preview: shareholder may sacrifice a voice in management or the right to share in profits above a stated amount. c. Many classes of shares, which vary in terms of rights and privileges, are possible. One share class, however, must represent the basic ownership interest (referred to as common shares). 7. Limited Liability: Shareholders cannot lose more than their investment. 8. Formality of Profit Distribution: a. No amounts may be distributed among the owners unless corporate capital is maintained intact. b. The board of directors must formally approve distributions to shareholders. c. Dividends must be in full agreement with the capital share provisions as to preferences, participation and the like. B. Characteristics of Preferred Shares The most common features are: 1. Dividend preferences 2. Preference to assets on liquidation 3. Convertible into common shares...
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- Spring '10