Cover paper (Agenda Paper 23)

The IASB published Discussion Paper DP/2020/2 Business Combinations under Common Control (BCUCC) in November 2020, with a comment letter deadline of 1 September 2021. In previous meetings, the IASB discussed the project direction for the project on BCUCC. The IASB was not asked to make any decisions regarding project direction.  

The purpose of this session is for the IASB to discuss the feedback from various stakeholders to inform the project direction.

Whether to change project direction (Agenda Paper 23A)

This paper summarised and analysed feedback on whether the IASB should choose Option 1 (i.e. develop recognition, measurement and disclosure requirements), or change the project direction and choose Option 2 (i.e. develop disclosure-only requirements) or Option 3 (i.e. develop no recognition, measurement or disclosure requirements).

The paper did not contain any questions for the IASB, but IASB members were asked to raise comments or questions on the feedback and the staff analysis.

Whether to choose a disclosure-only project (Agenda Paper 23B)

Agenda Paper 23A summarised and analysed feedback on whether the IASB should choose Option 1 or change the project direction. This paper summarised and analyses feedback on what the IASB should do if it changes the project direction.

The paper did not contain any questions for the IASB, but IASB members were asked to raise comments or questions on the feedback and the staff analysis.

Due Process Handbook assessment (Agenda Paper 23C)

This paper provided an updated assessment of the Due Process Handbook requirements for a standard-setting project (taking into account stakeholders’ feedback and our analysis of that feedback) and explained the staff views on whether to change the project direction and if so, whether to choose Option 2 or Option 3.

This paper did not ask the IASB for decisions.

IASB discussion

All papers were discussed together.

Many IASB members expressed gratitude for the efforts of the staff and stakeholder feedback. IASB members agreed with the staff analysis that the cost benefit analysis also includes costs incurred by auditors and regulators. Many of the IASB members were undecided as to the project direction because whilst business combinations under common control may not be a prevalent issue, it is often a material transaction when it occurs. Some IASB members agreed that further analysis of Option 2 is required to inform their decision. However, other IASB members were concerned about performing further work on Option 2 due to resource constraints and doubted that this would yield a more decision-useful information. In addition, these IASB members considered the application of Option 2 as onerous and, therefore, if the project was to continue, the IASB should opt for Option 1. Some IASB members suggested that the staff could explore variations of Option 1 while other IASB members cautioned against this approach because variations of Option 1 were discussed at length in previous meetings. However, some IASB members were concerned about the duration of the project if the IASB opt for Option 1 because not all stakeholders are aligned on the accounting treatments proposed. The staff clarified that if the IASB decides for Option 2, the efforts would be focused on determining the viability of the project rather than any detailed analysis.

No decisions were made.