• Convertible preferred shares are a type of preferred shares that pay dividends and can be converted into ordinary shares at a fixed conversion rate after a certain period of time.

  • Convertible preferred stock is a type of hybrid security that has features of both debt and equity resulting from a dividend payment and a conversion option, respectively.
  • Once the common shares are trading above the conversion price, it may be wise for preferred shareholders to convert their preferred shares into common shares.
  • Once preferred shareholders convert their shares, they waive their rights as preferred shareholders (no fixed dividends or higher asset rights) and become ordinary shareholders (the ability to vote and participate in share appreciation).