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6 May, 2015 - 17:10

All shareholders of a corporation are entitled to basic rights. These rights differ according to classes of stock. Common stock possesses most of the voting powers, while preferred stock has preferential rights to a share in the distribution of earnings, and often has first claim to assets in the event of liquidation. Each common stoch shareholder also has a preemptive right to any new issue. The specific rights of a stock are found in either the charter or the stock certificate. The board of directors decides if earnings should be distributed to shareholders as dividends. Distribution of dividends is not guaranteed, and the decision is usually based upon the needs of a corporation.