Callable Preferred Stock

Callable Preferred Stock
 Preferred stock that the issuing corporation, at its option, may retire by paying the call price plus any dividends in arrears. gives the issuing corporation the right to purchase (retire) this stock from its holders at specified future prices and dates. The amount paid to call and retire a preferred share is its call price Amount that must be paid to call and retire a callable preferred stock or a callable bond., or redemption value, and is set when the stock is issued. The call price normally includes the stock’s par value plus a premium giving holders additional return on their investment. When the issuing corporation calls and retires a preferred stock, the terms of the agreement often require it to pay the call price and any dividends in arrears.

Point: The issuing corporation has the right, or option, to retire its callable preferred stock.

IFRS

Like U.S. GAAP, IFRS requires that preferred stocks be classified as debt or equity based on analysis of the stock’s contractual terms. However, IFRS uses different criteria for such classification.▪