What are puttable instruments?

Question

I read the definition as follows: "A puttable instrument is a financial instrument or a right that gives the holder the right to put the instrument or right back to the issuer for cash or another financial asset. The amount payable upon redemption is determined based on an index or other item that has the potential to increase and decrease"

Can anyone explain this in simple language with an example?

Answer 1

As per SIC D34, a puttable instrument is a financial instrument or a right that gives the holder the right to put the instrument or right back to the issuer for cash or another financial asset. The amount payable upon redemption is determined based on an index or other item that has the potential to increase and decrease.

An entity may issue puttable shares and the holder may return the shares at any given time back to the entity for cash or any other asset.