A type of share capital that represents ownership in an entity through the issue of its common shares (ordinary shares). It is the total amount of funds raised by an entity from private and public sources. In this sense, it is that part of capital that is contributed by the owners of the entity/ business in exchange for ordinary shares. Holders of the ordinary shares have equity ownership in the business in proportion to their holdings. Ordinary share capital represents all the entity’s issued share capital, other than capital that gives its holders a right to receive a dividend at a fixed rate but have no other right to share in the entity’s profits.

Typically, ordinary shares are entitled to dividends/ distributed profits and carry voting rights (that is, holders can participate in the voting process that helps determine the course of action for the entity, especially in relation to strategic affairs). However, these shares have no preference to dividends or distribution of assets (and hence the name “ordinary”).