Redeemable Shares: A Cautionary Tale

At times, companies distribute cash to shareholders by issuing redeemable shares, which can be automatically redeemed for cash. While the objective is to provide a tax-efficient method to distribute capital to local shareholders, redeemable shares can cause difficult tax issues for non-resident holders, and headaches for firms that process corporate actions.

The key to overcoming these challenges is to understand how redeemable shares work, and to recognize that a corporate event that begins with