Legal Definitions - redeemable stock

Redeemable stock is a type of preferred stock that can be bought back by the issuing corporation and retired. This means that the corporation has the option to call in the stock and pay the shareholder the original price of the stock plus any dividends owed.

For example, if a corporation issues redeemable stock at $100 per share and the shareholder has received $10 in dividends, the corporation can buy back the stock for $110 per share.

This type of stock is beneficial for corporations because it gives them flexibility in managing their finances. It also provides shareholders with some security because they know that they can sell their shares back to the corporation at a predetermined price.