Redeemable Preferred Shares - AcSB

Date recorded:

At its meeting on March 21-22, 2017, the AcSB reaffirmed its view that the basis for the exception should be on the condition of retention of control of the enterprise and decided that the control of the enterprise must be retained by the party receiving the redeemable preferred shares. The AcSB further decided on the additional conditions necessary to qualify for equity classification which determine that control of the future cash outflows of the enterprise has not changed.

The AcSB also decided that additional guidance relating to substantive rights should be added in Section 1591, Subsidiaries, to provide sufficiently robust guidance to address the characteristics of the redeemable preferred shares issued in a tax planning arrangement.

The AcSB will continue its discussion on transitional provisions and begin its discussion on disclosure requirements at its May 2017 meeting. Accordingly, the AcSB is expecting to issue a re-exposure draft during the third quarter of 2017.

Review the Executive Summary on the AcSB's Web site.

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