CE stands for common equity, also known as common shares, common stock or ordinary shares. Common equity is the most common type of share traded in stock markets around the world. Unless otherwise noted, the share price quoted for a corporation is that of its common equity. Other types of equities include preferred shares and warrants.
Common equity is the ordinary stock in a publicly traded firm. CE holders are entitled to a share of the firm's profits when such distribution is approved by the board of directors, and have the right to vote during the annual stockholder meetings. As a result, any individual or collective group holding more than 50 percent of all common equity can exert absolute control over the firm. While most large corporations issue other types of equity as well, many small firms have only CE. Even when other equity types are present, the vast majority of all shareholder equity tends to be in the form of CE.
Holders of preferred stock in a corporation are entitled to a predetermined annual payment in perpetuity. Therefore, preferred equity is more similar to a bond than ordinary shares. The biggest difference, however, is that annual dividends on preferred shares can be postponed in perpetuity by the board of directors, while bond payments must be honored or bondholders can take legal action. When both common and preferred stock is present, the preferred stockholders must be paid in full before any payment can be made to CE holders. When payment to preferred equity is postponed -- as is often done during hardship -- all accrued past payment must be made in full before common shareholders can be paid anything at all.
Although warrants are technically considered a form of equity, they are in fact more akin to long term options. A warrant is simply a contract that allows its holder to purchase the issuing firm's stock at a particular price at some point in the future. The key difference between options and warrants is that the latter tends to have a far longer expiration date. In addition, options can give the holder the right to buy as well as sell the underlying stock at a predetermined price depending on how the options contract is structured, while warrants always give the holder the right to buy the underlying stock.
In rare instances, an additional class of shares can be issued with special voting rights. Such shares are sometimes colloquially referred to as super stock, while their technical notation may be more along the lines of class A shares. The holders of this type of stock share the profits of the firm equally, but have greater voting rights. While each common stock gives the holder one vote, every super stock could provide five votes, for instance. Such shares are commonly issued when a founding family wishes to retain control of the firm with a relatively small investment.
- Photo Credit Jupiterimages/Goodshoot/Getty Images
What Does NASDAQ Stand For?
The acronym NASDAQ originally stood for the National Association of Securities Dealers Automated Quotations. The association formed in 1971 to provide electronic...
What Does PC Stand for After a Business Name?
PC after a company's name doesn't have anything to with computers. Instead, PC is short for professional corporation, a type of company...
What Does ISO Stand for in Insurance?
If you've ever been in the insurance industry, read over all the information forms you sign when you take out a policy,...
What Is Common Stock Equity?
Common stock equity represents ownership rights to a corporation. Investors must become familiar with the purpose of the corporation, the structure of...
The History of Stocks & Shares
Stock represents investment in a company. A person who buys stock, known as a shareholder, holds legal ownership of a set percentage...
What Does ADR Stand for in Stocks?
American Depository Receipts, sometimes called American Depositary Receipts--or ADRs--allow the shares of foreign companies to trade on U.S. stock exchanges. ADR shares...
What Does CC Mean at the End of a Web Address?
CC is the country code top-level domain assigned to the Cocos (Keeling) Islands. Top-level domains are the highest ranking domains in the...
What Does FTSE Stand for in Stocks?
The FTSE, an acronym for the Financial Times (FT) and London Stock Exchange (LSE) is a group of indexes that trade in...