Puttable instruments classification requires equity characteristics and cash-flow linkage to residual returns for recognition as equity. Puttable instruments give holders the right or create an automatic obligation for the issuer to repurchase or redeem for cash or another financial asset; to be classified as equity they must entitle holders to a pro rata share of net assets on liquidation, be in a class subordinate to all other instrument classes with identical contractual obligations, have no other contractual settlement obligations beyond the put, have expected cash flows tied substantially to profit or changes in net assets or fair value, and the issuer must have no other instruments that restrict or fix the instrument holders' residual return.