Financial Instruments - puttable instruments and instruments with obligations arising on liquidation
In February 2008 we issued Amendments to IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of Financial Statements —Puttable Financial Instruments and Obligations Arising on Liquidation. The new requirements will apply for annual periods beginning on 1 January 2009, with earlier application permitted.
The amendments are available on our subscriber website. Printed copies can be purchased from our Publications Department.
Effect of the Amendments
The amendments classify the following types of financial instruments as equity, provided they have particular features and meet specific conditions:
- puttable financial instruments (for example, some shares issued by co-operative entities)
- instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation (for example, some partnership interests and some shares issued by limited life entities)
There are important interactions between this project and the long-term project on liabilities and equity. However, this was a limited scope project aimed at dealing with the classification of certain instruments. More information on the project on Financial Instruments with Characteristics of Equity is available here.