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SIC-5 — Classification of Financial Instruments – Contingent Settlement Provisions


  • IAS 32 Financial Instruments: Presentation


  • Issued May 1998.
  • Effective date: Financial instruments issued in periods beginning on or after 1 June 1998.
  • Superseded by, and incorporated into, IAS 32 Financial Instruments: Disclosure and Presentation (Revised 2003, later renamed), effective for annual periods beginning on or after 1 January 2005.

Summary of SIC-5

SIC-5 addresses how to classify a financial instrument when the manner of settlement (in cash or in equity instruments of the issuer) depends on the outcome of uncertain future events that are beyond the control of both the issuer and the holder. SIC-5 states that such instruments should be classified in accordance with IAS 32.05 and .18 as liabilities, regardless of their legal form unless the possibility of settlement in cash appears to be remote, in which case the instruments should be classified as equity.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.