preferred shares

Legal Definition of preferred shares

Noun

1. A share in a company that has some kind of special right or privilege attached to it, such as that it is distinguished from the company's common shares. The most common special right is a preference over holders of common shares when dividends are declared. Another, is for the preferred shares to be redeemable at the option of either the holder or the company. Still another might be to disallow voting rights to preferred shareholders. Depending on the local laws in your state, there may be no limit to the qualifications a company can attach to preferred shares
   
   Example: A family company may only allow holders of preferred shares to use a recreational property belonging to the company

Synonyms

• preferred stock
• preference shares
• preferreds