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Callable Common Stock

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Definition of 'Callable Common Stock'

A security that represents ownership in a corporation that has voting rights, whose owners are last to be paid if the company liquidates and which is redeemable by the issuing corporation, at a predetermined price or at a premium to the current market price. Typically, callable common stock is issued for a subsidiary company by its parent company. The parent company reserves the right to buy back the shares of the subsidiary company, should it become strategically beneficial.
Investopedia Says

Investopedia explains 'Callable Common Stock'

Common stock is usually non-callable; it must be specifically designated as callable at the time of sale, if the corporation wants to have the option to redeem it. Otherwise, common stock will remain on the market indefinitely, unless the company chooses to buy back its shares on the open market, has its shares delisted or goes bankrupt.

Related Definitions

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    Callable Bond

    A bond that can be redeemed by the issuer prior to its maturity. Usually a premium is paid to the bond owner when the bond is called. Also known as a "redeemable bond".
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  • Callable Preferred Stock

    A type of preferred stock that carries the provision that the issuer has the right to call in the stock at a certain price and retire it. Also known as "redeemable preferred stock".
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  • Common Stock

    A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy. Common stockholders are ...
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    • Parent Company

      A company that controls other companies by owning an influential amount of voting stock or control. A parent company will typically be a larger firm which exhibits control over one or ...
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    • Putable Common Stock

      Common stock that gives investors the option to put the stock back to the company at a predetermined price. Also known as a "putable swap".
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    • Subsidiary

      A company whose voting stock is more than 50% controlled by another company, usually referred to as the parent company.
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