The Ins and Outs

Split Preferred Shares

July 2, 2014

Split shares are one of the most commonly misunderstood types of preferred shares as their structure can be difficult to understand. In the creation of a split share, a split share corporation will invest in a portfolio of common shares that have attractive dividend(s) and growth potential as the underlying portfolio. The split corporation will then create two different securities; a preferred share and a capital share(s) both based on the original underlying portfolio. The value of the preferred share and capital share(s) combined form the Net Asset Value (NAV) of the Unit.