Page:Hints About Investments (1926).pdf/185

 Then there is the deferred or management or founders' share, usually of quite nominal face value, which also takes a share of the profits after a certain rate has been paid on the ordinary. It used to be fashionable to denounce these shares as necessarily a wicked feature of company finance, but they are not necessarily so. When issued to those who have been, or are, helpful in organizing or carrying on the company, they may be a quite legitimate form of payment for highly important services.

And occasionally—such is the incorrigible habit of using words in different senses in which finance insists on indulging—shares are called ordinary which are really preferences, entitled to a fixed rate of dividend and no more, with a deferred share behind them enjoying the real rights and risks of ownership. But this arrangement is rare. As a rule the ordinary or common shareholder is the real owner to whom the property belongs, subject to the limited claims of the creditors and preferred partners.

As has been already indicated, old-fashioned investment doctrine looked on the ordinary share as so risky that anyone who held it became a speculator; those who upheld it confined the attention of seekers after a safe income to bonds, debentures and preferences, regarding