Capital that is issued, through shares, for a specific period of time to meet the issuers urgent needs of funding. Companies not willing to increase their permanent capital resort to redeemable capital (as a short-term source of funding) to provide for their temporary funding requirements. Once these requirements are met as desired and for the intended purposes, the issuer may buy back the shares and return their value to the providers of funds. Typically, providers of redeemable capital receive more dividends than providers of permanent capital.
Redeemable capital has the characteristics of both equity and liability and is embedded with a put option of redemption to the benefit of the issuer.
It is also referred to as quasi-equity.
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