Why redeemable preference share is not included in the equity security?

Redeemable preference shares are not classified as equity securities because they include a contractual obligation for the issuing company to repurchase the shares at a predetermined price after a specified period. This characteristic aligns them more closely with debt instruments, as they impose a financial liability on the issuer. Additionally, redeemable preference shares typically do not participate in the residual profits of the company like ordinary equity shares, further distinguishing them from equity securities.