Ordinary vs Preference Shares in Thailand: What Every Investor Should Know
When investing in a company, it’s crucial to understand the types of shares available and how they affect your rights and potential returns. Two of the most common types of equity in both private and public companies are ordinary shares and preference (or preferential) shares. Each type comes with its own set of rights, risks, and benefits.
Table of Contents
What Are Ordinary Shares?
Ordinary shares, also known as common shares, represent the basic form of ownership in a company. When you hold ordinary shares, you become a part-owner and gain the right to:
Vote in shareholders’ meetings, usually one vote per share
Receive dividends, although these are not guaranteed and may vary
Claim a share of the company’s profits after all obligations are paid
Participate in capital gains if the share price increases
However, ordinary shareholders rank last when it comes to claims on the company’s assets during liquidation. This means if the company is wound up, ordinary shareholders only receive what’s left after debts and preference shares are paid.
What Are Preference Shares?
Preference shares are a special class of shares that typically offer fixed dividends and priority over ordinary shareswhen it comes to dividend payments and liquidation.
Key features of preference shares include:
Fixed dividend payments: Often paid before any dividends are distributed to ordinary shareholders
Priority in liquidation: In the event of company dissolution, preferential shareholders are paid before ordinary shareholders
Limited or no voting rights: Most preference shares do not carry voting rights unless certain conditions are met (e.g., missed dividend payments)
Some types of preference shares may also be:
Cumulative (unpaid dividends accumulate and must be paid before ordinary dividends)
Convertible (can be converted into ordinary shares under certain conditions)
Redeemable (can be bought back by the company after a fixed period)
Key Differences at a Glance
| Feature | Ordinary Shares | Preference Shares |
|---|---|---|
| Dividend | Variable, not guaranteed | Fixed, typically guaranteed |
| Voting Rights | Yes (one vote per share) | Usually none |
| Liquidation Priority | Last in line | Paid before ordinary shareholders |
| Capital Appreciation | Higher potential for gains | Limited upside |
| Risk Level | Higher risk | Lower risk due to fixed returns |
| Convertibility | Not convertible | May be convertible into ordinary shares |
Which One Is Right for You?
Ordinary shares may be ideal if you’re looking for long-term growth, want voting rights, and are willing to accept higher risk for potentially higher returns.
Preference shares are suitable if you prefer stable income through fixed dividends and more security in case the company faces financial trouble, but you’re less concerned about voting or capital appreciation.
Understanding the difference between ordinary and preference shares is vital for building a solid investment strategy. While both can offer value, your choice should depend on your financial goals, risk tolerance, and investment timeline.
If you’re planning to invest in a company or need guidance on structuring your own business shares in Thailand, our team at ACCOUNTINFIRM CO., LTD. is here to help. We provide expert accounting and advisory services tailored to investors, startups, and established companies.
Maximize Your Company’s Potential with our Team’s Support.
Our team delivers efficient, professional, and proactive support to help your business operate with confidence and control. Let’s discuss how we can add real value to your operations.
Let’s set up and kick things off!
Request a Quote
Request a Proposal
Request a Meeting