What are redeemable shares?

Redeemable shares are financial instruments that a company issues with the specific feature that they can be repurchased by the company at a predetermined time or under certain conditions. This characteristic allows the issuing company to manage its capital structure effectively.

The ability for a company to repurchase redeemable shares can provide flexibility in financing operations and in managing the total equity in the company, enabling it to return capital to shareholders when favorable.

Other choices do not accurately define redeemable shares. For instance, the first option incorrectly states that redeemable shares cannot be bought back, which contradicts their very nature. The choice regarding voting rights is misleading, as redeemable shares can have voting rights, depending on the terms of their issue. Finally, while the option about fixed dividends describes a different financial instrument, redeemable shares may or may not provide fixed dividends; their defining feature is their repurchase condition rather than the nature of dividends.