A type of preferred share that does not, by its terms or by the terms of any agreement or instrument pursuant to which such preferred share was issued, entail redemption at any fixed date, or at the option of the holder at any time.

This share is also known a a perpetual preferred share. Generally, it a preferred that has no redemption date. In other words, this fixed-rate equity instrument allows the holder no participation in the issuer’s profits (it pays no dividends), and has no defined maturity or repayment date. Any shares that cannot be redeemed or acquired by the issuing entity at a specific date are known as non-redeemable preferred share.

However, this instrument has a claim on earnings senior to the claim of common shares. A perpetual preferred is usually issued by financial institutions to obtain permanent equity capital. Sometimes, issuers prefer to enhance this instrument with a call option that permits them to recall the issue after a specific period of time. Perpetual preferred share may either be issued directly or by virtue of conversion of other securities (such as convertible bonds).

It carries main features of no maturity date and payments of a fixed dividend upon issue, usually declared and paid quarterly, in perpetuity. As expected, holders of perpetuals do not enjoy voting rights, while the issuers have the right to redeem.

On the contrary, redeemable preferred shares may have redemption features in which the preferred shares may be exchanged for cash (monetary assets). Preferred share that is redeemable at the option of the issuer (it is embedded with a call option) may also have a mandatory redemption feature or a redemption feature outside of the control of the issuer. Redeemable preferred share provides the issuing entity with the option to repurchase shares at a predetermined price, granting them more control over capital structure adjustments. On the other hand, non-redeemable preferred share does not have this feature, making it a more permanent investment for shareholders.