What is the difference between preferred stock and common stock?

Both types have the same value, but the difference is in the rights that accrue to the shareholders holding each type.

Preferred shares are those issued by the company and do not exceed 10% of the company’s capital and entitle their owners to obtain a percentage more than the ordinary shares’ holders of the company’s net profits, after setting aside the statutory reserve.

The main distinguishing feature of preferred stock dividends are paid to the shareholders of the preferred stock before the shareholders of the common stock.

Preferred shares do not give their owners the right to vote in the general assembly of shareholders unless the company fails to pay the specified percentage to the shareholders who own those shares from the net profits of the company after setting aside the statutory reserve for a period of 3 consecutive years.

In the event of the company’s bankruptcy, the preferred stockholders shall be paid out of the company’s assets first after paying the company’s debts and before the common stockholders

If the decision of the General Assembly amends the rights of the owners of preferred shares, including liquidating the company or converting the preferred shares to ordinary or vice versa, this decision shall not be effective unless it is approved by the voting rights of the owners of the preferred shares in their own assembly.