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IAS 39 – Holder’s accounting for exchange of equity instruments

Date recorded:

The technical manager said that the agenda paper addressed the question of whether the holder of an equity instrument with a central bank should derecognise its investments on the exchange of that instrument for another equity instrument with different terms. The Committee had decided in July not to take the issue onto its agenda. Three comment letters had been received on the tentative agenda decision. One respondent disagreed with the tentative agenda decision and requested that the Committee referred the broader issue to the IASB. However, the IASB and the IFRS IC had already considered addressing the broader issue and decided not to initiate a project.

One Committee member agreed with the tentative agenda decision but would like for the Committee to recommend to the Board to address the issue outside of a broader derecognition project.  Another Committee member disagreed with the tentative agenda decision as it was a widespread issue in her view. A fellow Committee member agreed with that but said he would support finalising the tentative agenda decision nonetheless as the fact pattern was very specific.

When taking a vote, 13 Committee members agreed with the finalisation of the tentative agenda decision.

The Chairman said that a recommendation to the Board needed to include an analysis. A Committee member said that an analysis would only make sense if the Board had capacity to initiate a project. The Chairman said that this could be discussed in a small-group meeting.

One observing Board member said that the Board needed to be convinced that the issue could be addressed in a narrow-scope project otherwise they might suggest to go through the agenda consultation.

None of the Committee members objected to this procedure.

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