Question

''Shareholders of corporate stock may have claims to a company’s assets and income.” Discuss and analyze this quote.

Answer 1

Common Shareholders of the company have a residual claim on the assets of the company and company is also not mandatorily required to pay them with any kind of dividend because dividend payments are also not mandatory in nature.

Preference shareholders are having a preferential claim on the Assets of the company and the preference dividend which is to be paid to the preference shareholders are mandatory in nature and they will be paid so the preference shareholders of the company have claims on the Assets of the company as well as income of the company but common share holder does not have this Liberty.

this quote is true from perspective of preference shareholders as equity share holders does not have any mandatory payment and mandatory claim of the Assets of the company as they have the residual claim on assets