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IAS 32 – Put options written over non-controlling interests

Date recorded:

At the IASB's September 2011 board meeting, considering a recommendation by the Committee, the IASB discussed a possible scope exclusion to IAS 32 Financial Instruments: Presentation for put options written over the non-controlling interest in the consolidated financial statements of a group. The objective of the scope exclusion was to address a potential inconsistency between the requirements of IAS 32 , IAS 39 Financial Instruments: Recognition and Measurement and IFRS 9 Financial Instruments for measuring financial liabilities and the requirements in IAS 27 Consolidated and Separate Financial Statements and IFRS 10 Consolidated Financial Statements for accounting for transactions with owners in their capacity as owners. That is, whether the offsetting entry for subsequent measurement changes should be to profit or loss or to equity.

The IASB voted not to amend the scope of IAS 32 to exclude these put options over non-controlling interests. However, the IASB expressed support for considering addressing the potential inconsistency; not by changing the measurement basis of the non-controlling interest, but by clarifying the accounting for subsequent changes in the measurement of such puts. The IASB asked the staff to obtain feedback from the Committee on how they wish to be involved in further considering this issue.

As part of the Committee's November 2011 meeting, the Committee considered their potential involvement in this project. Many Committee members expressed a preference not to be involved in the project, as they expressed concern that no viable conclusion would be reached given the significant amount of time that had been spent to date evaluating this issue, while others believed the scope of the IASB's intended project was too restrictive to advance the issues appropriately.

However, when put to a vote, the Committee decided that they would like to be involved with this issue in the future. The Committee requested that specific feedback be garnered from the IASB as to the anticipated scope of the project. The staff noted that they would be requesting feedback on the scope of the project during the IASB's November 2011 board meeting.

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