This section is from the book "Popular Law Library Vol8 Partnership, Private Corporations, Public Corporations", by Albert H. Putney. Also available from Amazon: Popular Law-Dictionary.
The most important classification of stock is that into common and preferred stock. Other species of stock are deferred stock and guaranteed stock and special stock.
Preferred stock is stock which receives dividends, up to a specified amount before the common stock. Preferred stock may be either cumulative or non-cumulative. In the case of cumulative, preferred stock, any deficit in the dividends due one year will be carried over to the next, and all arrears must be paid on the common stock. In some cases preferred stockholders have the right to vote in the corporation, and in other cases they do not. In some corporations dividends on preferred stock are limited to the specified figure; in other cases, after the common stock has received a dividend equal to that previously paid the preferred stock, the two forms of stock share equally in any additional sums of money set aside for dividends. In case of the dissolution of a corporation its preferred stock is generally paid in full before any of the assets can be divided among holders of the common stock.
Deferred stock is the opposite of preferred stock. Dividends on this class of stock are deferred until after the payment of dividends on other classes of stock. Deferred stock is unusual.
Special stock is a species of stock only existing in Massachusetts. It is in reality almost as much in the nature of a debt as of stock. It is subject to redemption after a fixed time, and its issue makes the general stockholders liable for all debts of the corporation until the special stock is retired.
Guaranteed stock exists where one corporation is leased to another, and the latter corporation guarantees the payment of certain dividends to the stockholders of the former.
Unissued stock is that portion of the authorized stock of a corporation which has never been transferred to any stockholder. Treasury stock is stock once issued, which has come back into the possession of the company.