Common shares

Common shares are issued by companies and give holders an ownership interest in the company. Holders of common shares generally have the right to vote on certain decisions involving the issuerAn issuer is a company that offers securities, such as shares, to the public in exchange for funds that it will use to improve its financial situation, carry out projects or develop new markets. and receive any declared dividends. Should the issuer be dissolved, holders will share a portion of the remaining assets. Common shares have no maturity date.

Expected return:

The return on common shares may be in the form of dividends and capital gains (losses). Many companies periodically pay dividends to their shareholders. Others may not pay dividends, either because they are not profitable, or because they choose to retain their earnings and reinvest them. In many cases, the return will depend primarily on the performance of the company’s stock, resulting in capital gains or losses when the shares are sold. The price of common shares may rise or fall, sometimes quickly and sharply, based on the size, profitability and financial stability of the company, as well as on the skills of its management and its exposure to economic slumps, etc.

Liquidity:

Common shares are normally traded on a stock exchange or on over-the-counter marketsAn over-the-counter market is a market where securities (such as bonds, money market securities, shares) that are not registered on an exchange are traded. It is an interdealer market.. However, there may not be any market for certain common shares and trading may be subject to restrictions.

Risk:

Medium to high: The risk depends on a number of factors such as the size, profitability and financial stability of the company, the quality of management and its exposure to economic slowdowns. If the company is dissolved and its remaining assets are distributed, the holders of common shares will be reimbursed after governments, employees, creditors and holders of preferred shares.

Restricted shares

Restricted shares hold limited voting rights or no voting rights except under special circumstances.

Expected return:

The return on restricted shares may be in the form of dividends and capital gains (losses). Many companies periodically pay dividends to their shareholders. Others may not pay dividends, either because they are not profitable, or because they choose to retain their earnings and reinvest them. In many cases, the return will depend primarily on the performance of the company’s stock, resulting in capital gains or losses when the shares are sold. The price of restricted shares may rise or fall, sometimes quickly and sharply, based on the size, profitability and financial stability of the company, as well as on the skills of its management and its exposure to economic slumps, etc.

Liquidity:

Restricted shares are normally traded on a stock exchange or on over-the-counter marketsAn over-the-counter market is a market where securities (such as bonds, money market securities, shares) that are not registered on an exchange are traded. It is an interdealer market.. However, there may not be any market for certain restricted shares and trading may be subject to restrictions.

Risk:

Medium to high: The risk depends on a number of factors such as the size, profitability and financial stability of the company, the quality of management and its exposure to economic slowdowns. If the company is dissolved and its remaining assets are distributed, the holders of restricted shares will be reimbursed after governments, employees, creditors and holders of preferred shares.

Flow-through shares

Flow-through shares are issued by certain oil, gas and mining exploration companies. They give shareholders certain tax deductions for eligible exploration, development and investment costs.

Expected return:

The benefit to an investor will partially depend on the tax benefits the latter can enjoy and the fluctuations in the price of the shares, with an impact on capital gains or losses when the investor sells the shares.

Liquidity

Flow-through shares are normally traded on a stock exchange or on over-the-counter marketsAn over-the-counter market is a market where securities (such as bonds, money market securities, shares) that are not registered on an exchange are traded. It is an interdealer market.. However, there may not be any market for certain restricted shares and trading may be subject to restrictions.

Risk:

High: Exploration and development programs generally carry high risk. In addition, exploration costs may not be eligible under the tax rules and tax deductions may be refused.

Preferred shares

Preferred shares are issued by companies. They generally entitle holders to receive a fixed dividend before any dividends are paid to holders of common shares. Should the issuer be dissolved, holders will share the remaining assets. Generally, preferred shareholders are not entitled to vote.

In many cases, preferred shares have special features, such as the holder’s right to redeem the shares at certain times. They may also be convertible, in which case the holder has the right to exchange them for common shares at a pre-established price. Preferred shares may be redeemable at the issuer’s option at certain periods. Others earn cumulative dividends: dividends not paid during a given year accumulate until paid out.

Expected return:

The dividends on preferred shares are generally fixed, although the company may reduce or suspend the payment of dividends if, for example, its profits are lower than expected or if it needs to maintain its earnings for various reasons.

The potential capital gains on a company’s preferred shares are generally less than what can be earned on the common shares of the same company.

The value of these shares is linked primarily to changes in interest rates and to the issuer’s earnings. Conversion and redemption privileges can also have an impact on the value of preferred shares.

Liquidity:

Preferred shares are normally traded on a stock exchange or on over-the-counter marketsAn over-the-counter market is a market where securities (such as bonds, money market securities, shares) that are not registered on an exchange are traded. It is an interdealer market.. However, there may not be any market for certain preferred shares and trading may be subject to restrictions.

Risk:

The risk depends on a number of factors such as the size, profitability and financial stability of the company, the quality of management and its exposure to economic slowdowns. If the company is dissolved and its remaining assets are distributed, the holders of preferred shares will be reimbursed after governments, employees and creditors.

The suspension of dividends in case of financial difficulties or rising interest rates may lower the value of preferred shares. An increase in the rate of return offered by other investments can also affect the price of preferred shares, making the fixed dividend on these shares less attractive. If the issuer is dissolved and its remaining assets are distributed, holders of preferred shares will be reimbursed after governments, employees and creditors.