How to Read a Prospectus for Preferred Shares

The quickest way to read a preferred shares prospectus is in three passes: the cover page, the summary ("The Offering"), and then the description of the security, read selectively. For US issuers such as Strategy or Strive, the document is a prospectus supplement, filed as form 424B5 and free to read in the SEC database EDGAR. Some 200 pages of legal English sound daunting. But the answers that decide your dividend and your rank sit on a few pages, and a handful of search terms will find them.

Why you should read the prospectus yourself

Everything that websites, brokers and this magazine write about a preferred stock is a summary. What counts legally is the prospectus and the certificate of designations it is based on. With bitcoin preferred stock this matters a lot, because the securities look alike at first glance and differ sharply in the small print: three Strategy preferreds pay 10% on $100, but one makes up missed dividends with a penalty rate, one not at all, and one pays in euros.

What preferred stock is and how it differs from common stock is covered in What is preferred stock?. This article is about the tool: how to find the original document and how to read it.

Prospectus, supplement, 424B5: the terms

US companies that issue securities regularly register a base prospectus with the SEC once, as part of a "shelf registration". It describes in general terms what the company may issue: shares, preferred stock, bonds, warrants. Each specific offering then gets a prospectus supplement that sets out the exact terms.

The company files this supplement under Rule 424(b) of the US Securities Act. The number after it says which paragraph of the rule applies. For bitcoin companies' preferred stock it is almost always 424B5. Alongside it you will see:

At Strategy, all preferred stocks hang off the same base prospectus dated 27 January 2025, registration number 333-284510. It is printed at the top of every prospectus supplement.

How to find the prospectus on EDGAR

1. Open EDGAR company search and enter the name, for example "Strategy Inc", or the CIK 1050446 directly. For Strive it is "Strive, Inc.".
2. Filter by form: enter "424B5" in the form type field. You get a list by date.
3. Pick the right document: you know the first issue date from the Digital Credit page or the press release. Strategy often files two 424B5s a few days apart: a preliminary one without a price and a final one with the price. Take the later one.
4. Full-text search for harder cases: EDGAR full-text search finds terms across all filings, such as "Perpetual Stride Preferred Stock".

Pass 1: the cover page

Our example is Strategy's prospectus supplement for STRD (10.00% Series A Perpetual Stride Preferred Stock), dated 5 June 2025 and filed on 6 June 2025. The first page already answers the key questions:

• What is offered: 11’764’700 shares.
• Stated amount and liquidation preference: $100 per share; the preference can rise but never fall below $100.
• Dividend: "Dividends on shares of the STRD Stock will not be mandatory." The dividend is non-cumulative, 10% a year on $100, only when declared by the board, quarterly at the time.
• Redemption: Strategy may redeem all shares if fewer than 25% of the shares issued remain outstanding, or after a tax event.
• Listing: application to list on Nasdaq under the symbol STRD.
• Price: $85.00 per share, $999’999’500 in total.

The pricing table on the cover tells you more than you might think:

Also on the cover: the banks (Barclays, Morgan Stanley, Moelis, TD Securities as joint book-running managers), the pointer to the risk factors from page S-14, and the delivery date of 10 June 2025.

Pass 2: "The Offering" and the table of contents

The STRD prospectus has two parts in its table of contents: the prospectus supplement with pages S-1 to S-60, followed by the base prospectus with general descriptions. Almost all that matters to you is in the first part:

"The Offering" is the best place to understand a security in ten minutes. For STRD it lists, among other things, the record dates (15 March, June, September, December), the payment dates and the ranking.

Use of Proceeds is worth reading too: Strategy says the net proceeds of about $979.7 million will be used for general corporate purposes, "including the acquisition of bitcoin". Right after that it states that bitcoin traded below $50’000 and above $110’000 in the preceding twelve months and pays no interest. The company itself is telling you that the collateral behind your security swings widely.

Pass 3: the sections that decide about your money

Dividend: "when, as and if declared"

This phrase appears in almost every US preferred stock prospectus. It means you have no claim to the dividend until the board declares it. Then comes the key difference. For STRD: because dividends are non-cumulative, there is no obligation ever to pay an undeclared dividend, and nothing accrues on unpaid dividends. In the same place, STRF's prospectus says the opposite, with compounding at a rising rate. How large that difference is in dollars is worked through in What does "cumulative" mean for preferred stock?.

Look out for the dividend stopper as well: with STRD, Strategy may pay no dividend on junior shares such as MSTR unless the STRD dividend for the most recently completed period has been paid in full. That is your only lever with a non-cumulative security.

Rank: "senior to", "equally with", "junior to"

The "Ranking" section tells you who stands ahead of you. For STRD in June 2025 it said: senior to the common stock, equal with future parity stock, junior to STRK and STRF and to all existing and future debt, including the convertible notes. Plus the amount: about $8.22 billion of debt as of 30 May 2025. The word "future" matters: Strategy may issue further senior securities later, and after STRD came STRC and STRE, which also rank ahead of STRD today. Today's ranking is shown in Strategy's capital structure.

Liquidation preference

Under "Liquidation, Dissolution or Winding Up" you find what you receive if Strategy is wound up: the liquidation preference plus declared but unpaid dividends, but only after all creditors and senior securities. The STRD prospectus also states explicitly that no funds will be set aside to protect this preference. The preference rises when Strategy sells through the ATM programme, to the highest of $100, the last price and the ten-day average. What this means in a wind-up is covered in What is a liquidation preference?.

Redemption by the company

"Redemption" tells you when Strategy may pay you out. For STRD: only if fewer than 25% of the shares issued remain, or after a tax event, at the liquidation preference. STRC's prospectus contains a redemption right at $101. Such a right caps your price: few buyers pay above the redemption price, because they could be paid out at any time.

Fundamental change: protection in a takeover

In the STRD prospectus a "fundamental change" is mainly: someone acquires more than 50% of the voting power, Strategy sells substantially all of its assets, or the common stock is entirely exchanged for other securities or cash in a merger. A merger after which the previous shareholders still hold the majority does not count. You may then require Strategy to buy back your shares at the $100 stated amount, plus declared, unpaid dividends. At a price of $67.50 that is a premium of almost 50%. Whether Strategy has the money at that point is another question.

Voting rights

The "Voting Rights" section is usually short and sobering. STRD has no general vote, only on changes that affect the security directly, such as its terms, or certain mergers. The STRF prospectus also says frankly: because Michael Saylor controls a large part of the votes through the class B common stock, the voting provisions of the preferred stock may not give you meaningful protection.

Taxes

The tax section describes US taxes. For you as an investor in Germany, Austria or Switzerland, the withholding tax is what matters: the prospectus mentions 30% or a lower treaty rate. For STRD it also warns that an increase in the liquidation preference could be treated as a deemed distribution. How the dividends are taxed at home is covered in Taxing Digital Credit dividends.

After the prospectus: ATM programme, annex and supplements

A prospectus is a snapshot of the issue date. Bitcoin preferred stock is usually sold continuously afterwards through an ATM programme (at the market): the company sells new shares at the current market price through banks. For this it files further 424B5s.

For STRD, the chain as of November 2026 looks like this:

1. Base prospectus of 27 January 2025.
2. Prospectus supplement of 5 June 2025 for the initial issue (the example above).
3. Base prospectus supplement of 4 November 2025 for all of Strategy's ATM programmes, with its own ATM risk factors.
4. STRD Stock Annex of 4 November 2025: the ATM programme for STRD, for up to $4’133’799’112.67 according to the latest supplement.
5. Supplement No. 1 of 2 November 2026: from 4 January 2027, STRD pays its dividend on every business day instead of quarterly. The supplement stresses that the rate, the board's discretion and the non-cumulative character are unchanged.

A checklist for every prospectus

With these answers you can place the figures on the Digital Credit page: BTC coverage is calculated with exactly the ranking the prospectus sets. How the figures fit together is explained in Effective yield, BTC coverage and BTC price at 1×.