Date
Attendees
Agenda
1) Use Case reminder
2) Where we are on our road map.
3) Open Action Items
4) JIRA Issues Review - https://jira.edmcouncil.org/projects/SEC/issues/SEC-7?filter=allopenissues
5) Todays content discussion.
SMIF OWL-UML
SKOS
RDF/S
6) For next week.
Proceedings:
Discussed the latest work on building out preferred shares. If the provision applies to both the holder and issuer, then we need to multiply classify by both redeemable and retractable. In either case, there is no maturity date except in the case where that date is extendable. So the restriction on retractable needs to be min 0 for maturity date (which we already have), and then for the case where it does have it, it needs to be extendable (i.e., new subclass with extendable maturity).
Preferreds technically have an unlimited life because they have no fixed maturity date, but they may be called by the issuer after a certain date. The motivation for the redemption is generally the same as for bonds—a company calls in securities that pay higher rates than what the market is currently offering.
Some preferred shares may also have a "maturity date." When the shares mature, the company gives you back the cash value of the shares when issued. Maturity dates give you some downside protection, since no matter how low the price goes while you're holding a preferred stock, at maturity you will get back the issue price (unless the company goes bankrupt or liquidates).
Retractable preferred shares are a specific type of preferred stock that lets the owner sell the share back to the issuer at a set price. Typically, the issuer can force the redemption of the retractable preferred share for cash when the shares mature. Sometimes, instead of cash, retractable preferred shares can be exchanged for common shares of the issuer. This may be referred to as a soft retraction compared with a hard retraction where cash is paid out to the shareholders.
A “retractable” or “term” preferred share has its maturity set at issue. A five-year retractable preferred would have a $25 “par value” which would be repayable by the issuer five years from the date of issue.
A “soft-retractable” preferred share is a preferred share that has its retraction value payable in “hard cash” or in an equal value of common stock of the issuer, at the choice of the issuer. This provision means that the issuer could avoid a cash payment at maturity or retraction and pay in stock issued from treasury. These issues normally provide for the stock price used to calculate the number of shares required to be 95% of the average price of the common shares in a time period before the retraction occurs. This is meant to penalize the issuer by making the stock payment option expensive to the issuer and other common shareholders because of the dilution effects.
This might mean that we need two additional subclasses of retractable - soft and hard retractable, even if CFI doesn't cover that.