What type of preferred shares must be converted on or before a specific date?

Mandatory redemptions or retractable preferred shares are designed with a specific requirement that necessitates conversion or redemption on or before a predetermined date. This characteristic distinguishes them from other types of preferred shares, as their structure inherently involves a commitment for the company to either redeem or convert these shares, ensuring that the holders are guaranteed some form of resolution by the specified timeline.

In contrast, redeemable preferred shares provide the issuer the option to redeem the shares but do not require it, potentially leading to permanent ownership if the issuer does not choose to redeem. Convertible preferred shares offer the holders the option to convert their shares into common stock, but this conversion is typically at the discretion of the shareholder, not mandated by a specific date. Perpetual preferred shares, as the name suggests, have no maturity date and thus do not have a conversion requirement tied to a deadline.

Understanding this distinction helps clarify why mandatory redemptions or retractable preferred shares are specifically required to be converted or redeemed within the established timeframe.